Based on the KPMG Survey of Corporate Responsibility Reporting 2017, a total of 97 percent of the Top 100 companies by revenue in Malaysia (N100) reported on their corporate sustainability performance, compared to the global average of 72 percent. The survey also showed that 93 percent of the N100 companies included Corporate Responsibility (CR) information (also known as sustainability information) into their respective annual reports, coming second only to India at 98 percent on a global ranking involving 49 countries.
According to Kasturi Nathan, Head of Governance & Sustainability at KPMG Management and Risk Consulting Sdn Bhd, these statistics indicate a strong shift in the focus amongst the top companies, saying, “Companies now see sustainability reporting as a way to strengthen their credibility among their stakeholders, with a clear acceptance that sustainability practices and meaningful disclosure reporting can become catalysts to gaining competitive business advantage in the pursuit of business longevity.”
On the other hand, KPMG’s CR survey found that integrated reporting still shows little traction in the country with only five percent of the N100 companies stating that their annual report is ‘integrated’. Furthermore, the assurance of sustainability data is still relatively low as only nine percent of the N100 companies have their sustainability reports or sustainability information in annual reports subject to a third-party independent assurance, compared to the global average of 45 percent.
Kasturi believes that the assurance of sustainability data will increase in popularity as more and more investors and stakeholders are aware that the companies’ “non-financial” information can have a material impact in the ability of businesses to build and protect value both in the short and the long term. “The pressure on firms to up their game on sustainability disclosure is growing by the day. The demand for companies to integrate financial and non-financial data in their annual report is expected to rise. Investors want to be comforted that companies can ensure the sustainability of their business operations,” she added.
More positively, an increasing number of companies in Malaysia (25 percent of N100 companies) stated that their annual or sustainability report has been prepared in accordance to the Global Reporting Initiative (GRI) guidelines or standards. Furthermore, 12 percent of the N100 companies have aligned their sustainability effort to the United Nation’s Sustainable Development Goals (SDGs). Both of these strongly demonstrate that companies in Malaysia are accelerating themselves to become global business partners. The SDGs is a set of global goals to eradicate poverty, protect the planet and ensure prosperity for all, which resonates strongly with businesses in Malaysia and clearly mirrors the sustainability focus promoted by the Eleventh Malaysia Plan.
KPMG’s CR survey further reported that 36 percent of the N100 companies acknowledge human rights as a sustainability issue for their business, while 45 percent stated their intention to improve the environmental, social and governance performance of their suppliers.
However, only three percent acknowledged climate change as a risk to their business compared to 28 percent globally. Similarly, only 10 percent of the N100 companies reported on their carbon reduction targets.
“Companies in Malaysia are increasingly aware that their responsibility extends well beyond the boundaries of their business. As a result, it is critical for them to update their risk profile to include such issues like human rights, health and safety, corruption or air emissions. This will allow them to anticipate how their business, but also their supply chain and business partners identify and manage the impact on the economy, environment and society in which the company operates,” commented Kasturi.