Institutional investors are now developing ESG portfolios and developing in-house ESG methodologies and this is resulting in the demand for thorough due diligence from the corporate world.
“The Covid-19 pandemic has taught investors that, regardless of how predictable risk is, the impact an event has on society and businesses is determined by the ability to plan for significant disruptions and changes in the operating environment.
“ESG issues have, as a signpost of a resilient business, jumped even more to the forefront,” RHB Research said in a report released today.
“As a result, investors must conduct thorough due diligence to avoid companies that may pose ESG risks,” it says.
Meanwhile, corporate Malaysia has made some progress in terms of governance after environmental and social factors have had the greatest impact on stock prices.
Unfortunately, domestic labour shortages and many economically important sectors’ reliance on large numbers of relatively low-skilled workers make the social pillar a minefield for the affected corporations.
“The government may ultimately have to step in to implement a holistic and comprehensive reform of migrant worker supply – from sourcing to housing, remuneration, working hours, overtime, repatriation, and many more.
“To reduce its reliance on manual labour, Malaysia needs to move up the value chain and increase participation in higher-tech industries that use more automation and robotics”, it says.