Maybank IB says CTOS’ ESG practices using its proprietary scoring methodology has scored above-average on overall score
of 78 (out of 100).
The credit ratings agency received full marks for its qualitative and target setting metrics but could do better in its “E”-related quantitative metrics. This is despite it being ahead of its software peers in setting emissions targets and committing towards Net Zero Carbon Emissions. CTOS’ overall score of 78 is now the joint-highest in our Malaysia research coverage.
“E”: Still room for improvement
In FY22, CTOS stepped up its environmental sustainability commitment by pledging Net Zero Carbon Emissions (NZCE) by 2050 via a series of mid-tolong term targets. These include reducing Scope 2 and 3 emissions by 15% by 2025/30 respectively from its 2022 baseline. Whilst data collection for emissions metrics are ahead of its peers, CTOS needs to make a sustained effort to actively reduce emissions YoY moving forward. The collection of waste management data/metrics would also help improve future scoring.
“S”: Above average across most metrics
CTOS’ digital business model allows it the scope for a high level of female representation in its lean workforce (59% in FY22). At managerial level, female representation is also above the industry average at 60% in both FY21 and FY22. Mgmt also places strong emphasis on training hours, averaging 29 in FY22 vs. 9 in FY21 – this has helped maintain its customer
service quality score above 90% (vs. the industry benchmark of 85%) and resulted in employee attrition being contained at a manageable 3.2%.
“G”: Sound and inclusive governance model
Its gender-inclusive policy also extends to Board representation whereby women account for 43% of Board members, well above the MCCG recommendation of 30%. Independent directors make up 71% of the Board in another metric where it leads the industry. Board and CEO salary also remains low (1.6%/0.6%), relative to its FY22 profit after tax of MYR71.4m.
