Two years of Covid-19 have spurred a heightened awareness of environmental, social, and governance (ESG) issues. This has given the global ESG movement, which was already gaining traction before the pandemic, a welcomed boost.

According to Refinitiv Lipper, a record US$649 billion was poured into ESG-focused funds globally in 2021 (up until 30 November) compared to US$542 billion the previous year. A survey by HSBC revealed that ESG investing is rapidly becoming a priority for players in ASEAN. In addition, Deloitte Insights reported that ESG-mandated assets are set to represent half of all professionally managed assets globally by 2024.

Similarly, governments – Malaysia's included, have made ESG a top priority in their respective pursuits for net-zero growth. Under the Twelfth Malaysia Plan (12MP), the Government has identified "Embracing the Circular Economy" as one of the game-changers to national development, wherein the adoption of ESG and Sustainable Development Goals (SDGs) by the public and private sectors will be essential.

In addition, a survey by PwC revealed that 76 percent of consumers are likely to discontinue their relationships with companies that treat the environment, employees, and the community poorly. This puts businesses under tremendous pressure to integrate ESG into their operations and decision-making.

ESG is mainly concerned with the sustainability outcomes and performance of business. It focuses on three dimensions – environmental, social, and governance.

The environmental aspect relates to efforts toward carbon emission reduction, climate action, resource efficiency, and supply chain management. The social element covers community relations, health and safety, human rights, and labour practices. Lastly, governance concerns an organisation's internal rules, procedures and control systems.

However, for a company to meet its goals in any of these dimensions is easier said than done. “A company faces the challenge of how to effectively drive ESG performance and accountability, implement criteria that align with domestic and international rules, and meet the expectations of regulators, investors, and consumers,” said Senior General Manager of SIRIM QAS International’s Management System Certification Department, Mohd. Hamim Imam Mustain.

“This is where conformity assessment plays an important role as it provides assurance through independent attestation that an organisation meets relevant standards and has all the mechanisms to mitigate and minimise ESG risks,” he added.

SIRIM QAS International, a wholly-owned subsidiary of SIRIM Berhad and Malaysia's leading Conformity Assessment Body (CAB), is committed to supporting businesses' ESG goals with credible and internationally recognised testing, inspection, and certification services, hence advancing the nation's sustainability agenda outlined in the 12MP.

Having been accredited locally by the national accreditation body Department of Standards Malaysia (Standard Malaysia) and internationally by the United Kingdom Accreditation (UKAS) and recognised by The International Certification Network Association - IQNET partners, SIRIM QAS International’s testing, inspection and certification services can help augment an organisation’s ESG strategy, enhance its competitiveness and access to global markets.

SIRIM QAS International offers a wide array of management system certifications to several categories of standards which include ISO standards, national standards and organisational standards. “A management system is a tool that helps businesses manage their policies and procedures, implementation of processes and monitoring in line with their business objectives. The standards, on the other hand, provide a systematic framework for the establishment, maintenance and continual improvement of their management systems,” explained Hamim.

He shared that these include the ISO 14067 Product Carbon Footprint which measures the greenhouse gases (GHG) emitted from products and the ISO 14064 Projects and Organisational Carbon Footprint which quantifies the GHG emitted directly and indirectly from the organisation itself. The verification and certifications, he said, will contribute to net zero carbon emission efforts.

Also included under the environmental dimension are the ISO 50001 Energy Management System and the ISO 14001 Environmental Management System certifications as well as the Aftermarket Motor Vehicle certifications against the Malaysian Standards MS 2696 & MS 2697 which are vital to achieving affordable and clean energy, clean water & sanitation and environment safeguarding.

Under the governance dimension, the ISO 37001 Anti-bribery Management Systems can help companies detect, prevent, and respond to bribery risks. Meanwhile, the ISO 9001 Quality Management System Certification ensures product or service quality to meet the customers’ ever-growing expectations while keeping abreast with the relevant or applicable rules.

Businesses may also explore several social-related schemes such as the ISO 45001 Occupational Health and Safety, ISO 39001 Road Traffic Safety, ISO 22000 Food Safety and ISO 13485 Medical Device management system certifications to advance their commitment to, reducing inequality, and enhancing health and well-being.

“In support of a decent working environment in Malaysia, SIRIM QAS International recently launched a Social Accountability Scheme based on the organisational standard SIRIM 50 to help companies operating in Malaysia incorporate acceptable and lawful practices into their business operations,” shared Hamim. “The scheme aims to encourage Malaysian companies to one-up their social compliance commitment considering the forced labour allegations that have plagued them over the past two years.”

Business leaders may better plan and execute their ESG goals by implementing management system certifications. Hamim explained that the standards will help companies manage their policies and processes through several repeatable steps, enabling them to better mitigate and monitor potential risks, and identify corrective actions and opportunities.

“It promotes a culture of continuous improvement throughout the organisation and among employees. In addition, it improves transparency, integrity, decision-making and business performance,” said Hamim.

“Certification also increases trust among stakeholders and deters false impression on environment statement or "greenwashing" (overselling and falsely marketing the extent to which an organisation, product, or service is sustainable or ethical). Stakeholders are more confident in a company that is ESG-compliant and has undergone rigorous auditing with a credible certification body.”

“This will boost the company's reputation and enhances its competitiveness, enabling it to secure more contracts and business deals and make for more resilient and sustainable supply chains. Eventually, this will open access to crucial markets wherein ESG is a core consideration to trade, like the US and the EU,” he noted.

The focus on ESG is showing no signs of slowing down. Therefore, SIRIM QAS International urges companies in both the public and private sectors at any stage of their sustainability journey to reach out and utilise its services. As a national CAB, SIRIM QAS International is ready to help companies meet their ESG goals and advance social good, environmental protection, business efficiency and growth.

In addition to its accreditations, SIRIM QAS International is also a member of IQNET, which means the management system certifications issued by SIRIM QAS International are accepted in over 30 countries worldwide. With its team of highly qualified auditors, SIRIM QAS International is ready to serve local and international clients across diverse industries.

“Aside from management system certifications, we also offer ESG verification for sustainability reporting disclosures, Eco-labelling certification, and product certification according to energy efficiency standards,” shared Hamim.

“As ESG continues to be a disruptive force in the future, SIRIM QAS International is here to help businesses unlock a future that is more resilient and sustainable,” he affirmed.