Source: BURSA MALAYSIA | Published: May 2024
In the realm of modern investing, the integration of Environmental, Social, and Governance (ESG) criteria has become more than a trend; it’s a paradigm shift. Malaysian markets, reflecting this global movement, have seen significant developments, particularly through the initiatives of FTSE Russell and Bursa Malaysia. This essay delves into the methodologies and trends of ESG investing in Malaysia, focusing on key indices that guide investors.
Empowering Investors with Data
To bolster ESG investing, Bursa Malaysia and FTSE Russell have collaborated to provide ESG scores for Malaysian public listed companies. These ratings are a vital tool for investors, offering insights into the ESG performance of companies. By making these scores accessible, Bursa Malaysia is not only promoting transparency but also encouraging companies to adopt and improve their ESG practices.
FTSE Russell ESG Index
FTSE Russell, a global leader in index analytics, has been at the forefront of incorporating ESG factors into investment decision-making. The FTSE Russell ESG Index serves as a prime example of how ESG considerations are being systemised within investment frameworks. This methodology is not just about screening companies for their ESG practices but about setting a benchmark that aligns investment with sustainable and ethical considerations. The index evaluates companies on numerous ESG criteria, offering investors a comprehensive view of a company’s sustainability performance.
FTSE4Good Bursa Malaysia (F4GBM) Index
This index serves to identify Malaysian companies that are not just performing well financially but are also responsible corporate citizens. It broadens the horizons for investors in Malaysia, offering them a way to invest in companies that align with their values and the greater good.
Recognising the specific needs of the Malaysian market, the F4GBM Index, launched in December 2014, is tailored to support ESG investments in Malaysian listed companies. The objectives are multifaceted: from increasing the visibility of companies excelling in ESG practices to fostering best practice disclosures and aiding the transition to a low-carbon, sustainable economy. Semi-annual reviews of the index ensure that it remains a relevant and dynamic tool for investors.
FTSE4Good Bursa Malaysia Shariah (F4GBMS) Index
In July 2021, an innovative stride was made with the introduction of the FTSE4Good Bursa Malaysia Shariah (F4GBMS) Index. This index merges ESG compliance with Shariah principles, catering to a growing segment of investors seeking to align their investments with their ethical and religious values. The F4GBMS Index tracks Shariah-compliant constituents of the F4GBM Index, representing a significant step in inclusive, values-based investing.
A New Era of Investing
The evolution of ESG investing in Malaysia, exemplified by the FTSE Russell ESG Index and the FTSE4Good Bursa Malaysia Index, represents a significant shift towards more responsible investment practices. These indices and ratings not only guide investors towards more ethical investments but also encourage companies to improve their ESG practices. As Malaysia continues to progress in its sustainable investment journey, these tools and metrics will undoubtedly play a crucial role in shaping a more responsible and sustainable future for the investment community.
*Some financial products and services may not be classified as Shariah-compliant. Please research carefully before making any financial decisions.
REFERENCES
Bursa Malaysia. (n.d.). FTSE4Good Bursa Malaysia Semi Annual Bulletin ISB Update. Retrieved from
https://www.bursamalaysia.com/sites/5d809dcf39fba22790cad230/assets/644a17e439fba20ac37403e0/FTSE4Good_Bursa_Malaysia_
Semi_Annual_/> Bulletin_ISB_Update.pdf
Bursa Malaysia. (n.d.). FTSE4Good Bursa Malaysia (F4GBM) Index. Retrieved from
https://www.bursamalaysia.com/trade/our_products_services/indices/ftse4good-bursa-malaysia-f4gbm-index
London Stock Exchange Group. (n.d.). FTSE4Good Index. Retrieved from
https://www.lseg.com/en/ftse-russell/indices/ftse4good#t-ftse4good-bursa-malaysia-index
Bursa Malaysia. (n.d.). FTSE Russell ESG Index: Methodology and Trends. Retrieved from
https://www.bursamalaysia.com/sites/5bb54be15f36ca0af339077a/content_entry617bfd2839fba20f54a06574/617f9bf139fba210b5e78188/
files/BISS_ FTSE_Russell_ESG_Index_Methodology_and_Trends.pdf?1636337129
Tags: ESG
