KUALA LUMPUR (Nov 10): Investors evaluating their stock preferences based on environmental, social and governance (ESG) factors should not be too worried over forced labour allegations as the ratings of affected companies could improve once these issues are resolved, said chief investment officer of Principal Asset Management Patrick Chang.

"Last year, there were problems with labour practices in some sectors, such as manufacturing, glove makers and so on. Obviously, that has been addressed, but ultimately I feel that some of it has been provoked, for example by some activists who also have an agenda.

"When we talk about the Covid-19 world, we found that some of the companies did not care about the workers, but once they start to change and move in the right direction, the normalisation of ESG assessment will move forward and that is a supply generator," he said at the Invest Malaysia 2021 Series 3: Sustainable Growth event held virtually on Wednesday (Nov 10).

Chang said, "Look at our neighbours in ASEAN like Thailand, Indonesia and the Philippines. These countries also have a lot of commodity-related and social problems. None of these problems are highlighted.

"Also, Malaysia is now ranked 21st on the KPMG Net Zero Readiness Index list. That is a fantastic way to go. I think it is our job to tell the investors, regulators, institutions and to the world that we [Malaysia] are doing a good job, but we need to maintain that because otherwise these misconceptions about social problems will keep coming up."

Recently, rubber glove maker Smart Glove was banned by US customs authorities for alleged forced labour. This makes it the sixth Malaysian manufacturer to be hit by such a ban in just over two years.

This came after Supermax Corp Bhd's products were banned over similar allegations. Top Glove Corp Bhd, the world's leading manufacturer of gloves, was also slapped with a similar ban by the US Customs and Border Protection (CBP) in July 2020 over allegations of forced labour.

Palm oil producers Sime Darby Plantation Bhd and FGV Holdings Bhd were also banned by CBP last year.

Another leading Malaysian glove manufacturer, WRP Asia Pacific, was also put on the CBP Withhold Release Order in September 2019 after charges that its gloves were produced through forced labour.