Bursa ESG Reporting Solution: A Step-by-Step Guide for PLCs

The urgency surrounding climate risks has intensified globally, and ESG issues have become critical strategic and operational concerns for companies. The increasing frequency and severity of extreme weather events, rising sea levels, and biodiversity loss exemplify this urgency — posing significant risks to business operations, supply chains, and asset valuations.

As governments, investors, and consumers become acquainted with climate-related issues, it is mission-critical that companies integrate ESG considerations into their business strategies, operations, and decision-making processes.

What is an ESG Reporting System?

ESG (Environmental, Social, and Governance) denotes a framework employed to evaluate an organisation's business practices and performance on various sustainability and ethical criteria.

Going beyond traditional financial metrics, the ESG framework evaluates how a company manages environmental risks like climate change and resource depletion. It also assesses governance and social factors such as labour practices, board diversity, human rights, executive compensation, and community engagement.

These considerations are becoming increasingly important in today's investment decision-making and corporate strategy landscape. More stakeholders are recognising the importance of sustainable business practices to drive long-term value creation, foster positive societal impact, and mitigate regulatory risks.

ESG reporting is a relatively nascent corporate endeavour that gained traction in the early 2000s. It provides companies with a means to show qualitative and quantitative progress towards environmental, sustainability, and corporate governance goals.

An ESG reporting system is essentially a specialised software product that orchestrates corporate disclosure — allowing organisations to disclose information about their operations relating to environmental impact, social initiatives, and governance practices. Overall, it helps users identify relevant metrics, choose appropriate standards, collect data, report it, and communicate the results effectively.

Why is ESG Reporting Important for Companies?

ESG issues have evolved from mere corporate social responsibility initiatives to pivotal strategic and operational concerns for companies across industries. Recognising that environmental degradation, social inequities, and governance failures pose material risks to business continuity, more companies are increasingly seeking to embed ESG principles into their core business strategies.

ESG reporting is now indispensable for demonstrating how a company's purpose aligns with creating long-term value and building trust with stakeholders. By proactively addressing these challenges, companies can augment their resilience to market disruptions, regulatory changes, and reputational risks — whilst positioning themselves for competitive advantage and sustainable growth.

Moreover, companies that prioritise ESG reporting typically attract greater investment flows, access to capital, and stakeholder support. It also provides organisations the opportunity to showcase transparency in the fight against climate and other issues.

Is ESG Compulsory in Malaysia?

The heightened sense of urgency around climate risks globally has propelled ESG issues to the forefront of corporate priorities. Malaysia has not been left behind in this seismic paradigm shift towards more sustainable and responsible business practices.

Yes — ESG is compulsory in Malaysia for public-listed companies, ensuring transparency in their activities and measuring sustainability. In fact, publicly listed companies in Malaysia have been required to comply with mandatory ESG reporting regulations since 2016.

What are the Bursa ESG Guidelines?

In Malaysia, Bursa Malaysia plays a significant role in orchestrating ESG compliance. Bursa Malaysia regulates multi-asset exchanges, investments, capital raising, and similar facilities — providing a platform for companies to raise capital via the issuance of shares and bonds.

Besides regulating the securities market in Malaysia, Bursa Malaysia champions initiatives like mandatory reporting to enhance sustainability disclosures amongst listed companies. The Bursa ESG guidelines dictate that publicly listed companies (PLCs) disclose Common Sustainability Matters with accompanying quantitative indicators, aligned with the Taskforce on Climate-related Financial Disclosure (TCFD).

How is Bursa Malaysia Promoting Good ESG Practices?

Bursa Malaysia promotes good ESG practices through various initiatives — providing video resources and guidebooks to help PLCs develop well-defined approaches, and conducting educational campaigns to raise awareness amongst listed companies and investors about the significance of ESG.

Furthermore, Bursa Malaysia has introduced enhanced sustainability reporting requirements, which are mandatory for all PLCs. Overall, Bursa Malaysia encourages companies to prioritise sustainability from the outset — enhancing the overall ESG performance of listed companies and providing investors with access to more sustainable investment opportunities.

Bursa Malaysia's New ESG Reporting Mandates

Bursa Malaysia continually seeks to reinforce its position as a catalyst for sustainable practices. In line with this ethos, the exchange launched the Bursa Malaysia ESG Platform on 4 December 2023 as part of its new ESG reporting mandates.

This platform was expressly designed to facilitate the submission of mandatory disclosures conforming to the prescribed format — ensuring standardised reporting and communication of sustainability information. These requirements are being executed in a phased approach to allow listed issuers time to familiarise themselves with the requirements.

What is the Bursa Malaysia ESG Platform?

The Bursa Malaysia ESG Reporting Platform is a free platform accessible through the Bursa LINK system. In practice, the platform requires listed issuers to generate a concise performance table, which must be disclosed in their respective sustainability statements. This performance table encompasses indicators and data relevant to the listed issuer's material sustainability matters — guided by Bursa Malaysia's Illustrative Sustainability Reporting Guide.

Overall, the platform plays a mission-critical role in orchestrating ESG reporting in Malaysia via a standardised format — ensuring that PLCs are held accountable for their sustainability practices and giving stakeholders access to reliable, comparable information about ESG performance.

Step-by-Step Guide to ESG Reporting for Bursa Compliance

Bursa Malaysia's reporting framework can be confusing and convoluted to navigate for new companies due to the depth of the guidelines. To effectively comply with Bursa's enhanced ESG reporting requirements, consider the following steps:

Step 1: Data Collection and Management

Commence by gathering all relevant ESG data across disparate departments in your business. This may include data on environmental impacts like emissions and energy consumption, or governance practices related to ethics policies and transparency.

This data collection should be comprehensive, considering both quantitative and qualitative factors. Ensure that the data is up-to-date, accurate, and relevant to your organisation's material sustainability matters.

Step 2: Data Analysis

Iteratively analyse the collected ESG data for accuracy and insights. Employ recommended software tools to assist in creating compliance reports that meet Bursa's guidelines. These tools should help you aggregate data to accurately identify trends and benchmark performance against industry peers and ESG standards — insights that can later be employed to inform company initiatives and areas for improvement.

Step 3: Submission and Verification

Ensure to submit the report via Bursa Malaysia's reporting platform, adhering to the specified deadlines and requirements. The performance table must include indicators and data pertinent to the listed issuer's material sustainability matters.

Before submission, consider involving internal audits, reviews by ESG specialists, or third-party verification to validate the integrity and reliability of the reported information. The regulatory framework set by Bursa Malaysia may be overwhelming to interpret and implement effectively — the extensive nature of the reporting guidelines encompasses various aspects of corporate disclosure as well as financial and sustainability reporting.

Step 4: Continuous Improvement and Monitoring

Update strategies and reporting processes regularly based on new guidelines and performance feedback. The ESG landscape is continually evolving, so it is imperative to keep abreast of new policies, regulations, and best practices issued by Bursa Malaysia. Additionally, solicit feedback from stakeholders and incorporate lessons learned into future reporting cycles to drive positive impact over the long term.

Challenges Faced by PLCs in Bursa ESG Reporting

Public-listed companies face several key challenges in ESG reporting:

• Data Collection: Companies often struggle to collect accurate and comprehensive data from various departments and operations. Without robust data collection mechanisms, companies risk inaccuracies and inconsistencies in their ESG disclosures — undermining stakeholder trust. This challenge is aggravated by the lack of standardisation in reporting, which leads to confusion and difficulty in comparing data across companies and sectors.
• Consistency: Ensuring consistent reporting across different departments, subsidiaries, and financial periods can be exceedingly sophisticated and time-consuming — especially for multinational corporations with complex operations. This inconsistency can hinder meaningful ESG benchmarking and analysis.
• Regulatory Compliance: Keeping up with evolving ESG reporting requirements and regulations can be challenging, especially with limited resources and expertise.

To address these challenges, companies can benefit from leveraging robust ESG reporting software that streamlines data collection and validation, ensuring reports are consistent and accurate whilst facilitating compliance with regulatory requisites.

Benefits of Using ESG Reporting Software

Advanced ESG reporting software is indispensable in streamlining the compliance process and enhancing strategic decision-making through better data insights. By automating data collection, validation, and compilation from various sources, these tools reduce PLCs' manual effort — ensuring data accuracy and more efficient compliance with standards.

Additionally, advanced ESG software provides mechanisms for in-depth data analysis, trend identification, and performance benchmarking — enabling companies to identify risks, opportunities, and areas for improvement.

Lestar ESG by Mandrill Tech is purpose-built for this challenge, featuring:

• Centralised ESG Data Platform: Lestar ESG centralises data collection to a single platform, facilitating easier management and access. This reduces manual data entry, eliminates data silos, and minimises the risk of human error whilst ensuring data accuracy and comprehensiveness.
• AI-Powered LLM Chatbot: Lestar employs AI-powered language model (LLM) chatbots to help users efficiently query and retrieve ESG data using natural language — making it easier to analyse specific ESG data points and facilitating more efficient decision-making and reporting.
• Intelligent Dashboards for Forecasting: Lestar ESG features intelligent dashboards that provide an actionable and comprehensive view of the organisation's sustainability performance — with detailed graphs and charts of ESG performance indicators, predictive analytics, and scenario modelling capabilities powered by real-time ESG parameter tracking.

Conclusion

With escalating concerns about the impact of climate change on economies, businesses are under mounting pressure to address sustainability as a critical strategic imperative. ESG reporting and compliance are becoming increasingly crucial — helping to demonstrate transparency, accountability, and responsible stewardship of environmental, social, and governance issues.

By disclosing all related information, organisations can provide stakeholders — including investors, customers, employees, and regulators — with insights into their sustainability performance, risk management practices, and ethical conduct.

Adherence to ESG standards not only fosters trust with stakeholders but also enhances resilience to regulatory changes, reputational risks, and market disruptions — ultimately driving long-term value creation and competitive advantage in an increasingly sustainability-conscious world.

By investing in Lestar ESG, tailored to Bursa Malaysia's reporting needs, PLCs can mitigate risks, drive stakeholder engagement, and demonstrate their commitment to sustainable business practices. Talk to our team today to get started.

Have questions about your compliance obligations? Talk to the Lestar ESG team today.