Globally, the emphasis on and recognition of ESG (environmental, social and governance) factors have grown significantly in recent years, leading to increased demand for transparency on ESG by companies. In response to the growing demand by investors and buyers, enhanced sustainability reporting requirements for Main Market-listed companies will be implemented in phases, starting with the disclosure of common sustainability matters for financial year ending on or after Dec 31, 2023. There is also a need to facilitate comprehensive ESG disclosures by companies including their supply chains, to boost their overall competitiveness and investability.
Recognising this need, Bursa Malaysia, in collaboration with the London Stock Exchange Group, has developed the Centralised Sustainability Intelligence (CSI) Platform — a centralised repository for ESG disclosures. The CSI Platform enables public-listed companies (PLCs) to consolidate and disclose ESG data in a standardised manner, streamlining reporting and enhancing data credibility.
In addition to consolidating sustainability disclosures, the platform offers tools such as the Task Force on Climate-Related Financial Disclosures (TCFD) reporting module and a carbon emission calculator for companies and their supply chains. By creating an ecosystem around the CSI Platform, Bursa Malaysia aims to drive growth and Malaysia’s transition to a green economy.
“We envision that the CSI Platform will serve as the national repository for listed companies’ sustainability disclosures, encourage effective management of their supply chain’s carbon emissions, and incentivise decarbonisation through green financing solutions offered by banks,” said Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia Bhd.
The CSI Platform encourages companies of all sizes to adopt sustainable business practices, enables stakeholders to make informed decisions based on standardised and comparable ESG data, and supports policymakers in monitoring and shaping the appropriate regulatory landscape. As the scope of sustainability disclosures extends to encompass supply chain emissions and practices, companies are therefore pushed to identify and mitigate risks throughout their supply chain, rather than merely within their operations.
“While the whole ESG disclosure exercise sounds daunting to small- and mid-cap companies, it can facilitate business growth to some extent, where ESG is not yet being sufficiently tapped as a competitive business driver. The CSI Platform allows companies of all sizes to come on this journey as a competitive advantage,” says Neil Pabari, LSEG, Global Head of Corporate Sustainability Solutions.
The CSI Platform’s Early Adopter Programme (EAP) or its series of ongoing Proof of Concepts (PoCs) aims to assess or refine the functionality of the CSI Platform across various industry sectors in a pilot programme. The PoCs are expected to be completed by year’s end, to enable the rollout of the platform to all PLCs thereafter.
Stakeholders and early adopters of the platform
The CSI Platform, which enables data-driven decisions, transparency, and collaboration, benefits not only PLCs and investors but also regulators, supply chain partners, financial institutions, and the public.
The platform allows regulators to monitor disclosures and compliance, as well as shape regulatory frameworks, while also simplifying reporting, allowing benchmarking and enhancing transparency for PLCs.
Financial institutions, on the other hand, will get to use ESG data to facilitate green financing, manage risks and support the transition to a greener economy. Conversely, supply chain partners can monitor and encourage sustainability in their operations.
Although the CSI Platform is still in its early days, early adopters of the platform can already envision how it can enhance their credibility to gain competitive edge. Representatives from several corporates and leading banks who are piloting the CSI Platform recently voiced their related objectives and aspirations at the inaugural PLC Transformation Programme’s #DIGITAL4ESG Forum organised by Bursa Malaysia.
UMW Holdings Bhd, a participant in the Early Adopter Programme (EAP) of the CSI Platform, believes that its participation in the PoC can enhance the company’s ESG data management and performance, to attract business opportunities. The programme enables UMW to assess the Scope 3 emissions of their supply chain and assist over 5,000 vendors in reducing their GHG emissions. “With the new platform, we will be able to work towards shaping the group’s ambition to achieve net zero by 2050,” said Datuk Abdul Rashid Musa, UMW, Group Chief Mobility & Innovation Officer/President of Aerospace Division.
On the other hand, PETRONAS, Malaysia’s national oil and gas corporation, said by leveraging the CSI Platform, it is showcasing its commitment to sustainability and positioning itself as a leader in the energy sector’s transition to cleaner solutions.
“PETRONAS believes this programme is aligned to our overall strategic direction both as a means of realising our net zero carbon aspirations within the group while utilising this platform as a means of bringing to market our clean energy solution,” said Aadrin Azly, PETRONAS, VP, Group Technology & Commercialization.
Banks’ role in CSI Platform to unlock capital
Implementing good ESG practices offers several benefits, including reduced capital costs and business risks, strengthened shareholder position, and increased access to long-term capital. It also improves operational efficiency and enhances corporate stature.
The CSI Platform enables banks to develop green financing products and services that incentivise decarbonisation of the corporate sector and their supply chain.
For example, Malayan Banking Bhd (Maybank), which has committed to mobilising RM80 billion in sustainable finance by 2025, believes the CSI Platform will make it easier for PLCs to disclose standardised ESG data. Additionally, it will enable banks to reach both corporate vendors and suppliers, providing them with greater access to ESG financing, it added.
“This is not about competition between banks. We are doing this for a larger goal, and we want to make sure we are part of the agenda to make sustainable finance available,” says Mario Utama, Managing Director of Global Transaction Banking at Maybank.
Furthermore, Azeem Jamshed Azmi, regional trade financier at CIMB Bank, said, “This CSI Platform is a market-driven idea, and we want to see how we can help businesses along the way. We have to try to take into account globalisation in terms of our products and, of course, this will benefit both sides, the customers and the companies.”
Involving company leadership in the ESG journey
Incorporating ESG considerations at the highest level allows companies to drive meaningful change and align sustainability with their long-term business goals. Engagement at the board level ensures sustainability is integrated into the company’s strategic priorities, risk management processes and decision-making frameworks.
Diana Gan, Vice President of the INSEAD Alumni Association, said meeting this agenda requires stimulating conversation among board members. She also points out that each board member has different areas of expertise, and some may require training and education to better understand the significance of different aspects of sustainability measurement or disclosures.
“Another practical thing we do is that we have a WhatsApp group, and we share the training we have attended. This also raises interest and awareness level. So, just within the board itself, simple things like that would already change.
“For small and medium-sized public companies and SMEs, the very first step to embark upon is education. Go to conferences, come to meetings, to understand what’s out there in the market,” Gan emphasises.
Perspectives from mid- and small-sized companies on digitalisation
The CSI platform is designed to foster an inclusive, vibrant and diverse ecosystem, granting all companies, listed or private, access to its features. This extends to small and medium-sized enterprises (SMEs), providing them with an opportunity to leverage the platform for their sustainability disclosures. However, SMEs often face challenges such as lack of connectivity, a fragmented data ecosystem and varying demands from stakeholders regarding ESG information.
Lee Kwee Heng, Executive Director and Managing Director of Tomypak Bhd, acknowledges such hurdles. He says Tomypak has data stored in spreadsheets and enterprise resource planning (ERP) systems, resulting in disparate data sources. Gathering accurate data from these sources becomes complex and time-consuming.
“The challenge is getting all the accurate data from all the different sources,” Lee said.
Similarly, Lyanna Tew, Head of Strategic Communications, Sustainability and Corporate Sustainability at Mah Sing Bhd, says the company faces data collection challenges, owing to the nature of its business. As a property developer that relies extensively on external contractors and suppliers, Mah Sing deals with data inconsistencies caused by the different calculation systems used by these stakeholders. Moreover, manual data entry through Excel spreadsheets or OneDrive exacerbates the risk of errors.
“Mah Sing has a very small construction arm, and a lot of our construction work is done by external contractors. So, there’s a problem with data collection, because the different job sites, contractors and suppliers give us different calculation systems,” says Tew.
The CSI Platform offers a solution by providing a standardised platform for data collection. This enables companies such as Mah Sing to gather consistent and reliable data from multiple sources.