Companies with good ESG practices more resilient during Covid-19 pandemic

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According to The Edge,  companies with good environmental, social and corporate governance (ESG) practices have been more resilient since the start of the Covid-19 pandemic. This is because investors’ growing concerns over damage to the environment have led them to put more value on the effective management of ESG risks.

Bursa Malaysia Bhd chief executive officer (CEO) Datuk Muhamad Umar Swift said while sustainable finance is still emerging in ASEAN capital markets, governments and regulators are making some meaningful efforts to promote and support the endeavor.

“The Covid-19 pandemic is widely seen to have given sustainability further impetus. Millennials and Gen Z are showing greater concern with respect to sustainability and changing expectations of businesses’ role in improving society and protecting the environment,” he said in his opening speech at the ASEAN: Beyond the Pandemic Crisis virtual conference.

Malaysia’s green roadmap

“Preliminary work has also commenced for an ASEAN taxonomy of sustainable finance. In Malaysia, we have seen the development of climate change and principles-based taxonomy by Bank Negara Malaysia (BNM) and the Securities Commission Malaysia’s (SC) SRI (Sustainable and Responsible Investment) road map for the Malaysian capital market.

“For Bursa, sustainability has always been a significant growth driver, with our approach having considerable influence on the ecosystem — for our public listed companies, investors and capital market intermediaries,” he said.

With several recent listings of companies involved in the renewable energy space, Bursa sees a potential growth area, given increasing priority by consumers and investors on the sustainability front, Umar said.

“These are some of the important steps that will help drive sustainability across the region. We are confident that the integration of sustainability best practices will see a successful transition to a genuinely sustainable economy for the ASEAN region,” he said.

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The 5 key drivers to the growth of ESG

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First of all, ESG is the acronym for Environmental, Social, and (Corporate) Governance.

The ‘Rethinking ESG in a post COVID-19 world’ publication has identifies the 5 keys for sustainability and how businesses can get ready to meet the sustainability challenges ahead.

The 5 key drivers to the growth of ESG:

  1. Investor expectations – Environmental and social factors are having a greater influence over a company’s future performance and valuation. Returns on socially responsible investment indices are outperforming their conventional index counterparts.
  2. Sustainability reporting – Global investors are now calling for mandatory inclusion of climate risk disclosures in financial accounts for use by companies, banks, and investors in providing information to stakeholders. Bank Negara Malaysia (BNM) and Securities Commission Malaysia are also pushing for the adoption of reporting standards as recommended by the Task Force on Climate-related Financial Disclosures (TCFD) among local financial institutions.
  3. Regulations – There has been an increasing need to address scrutiny and adverse public reaction over environmental and social concerns in several sectors, especially when they are subject to more stringent foreign regulations.
  4. Fiscal policies – Incentives to promote responsible business conducts to be sustainable. The Budget 2021 introduced Malaysia’s first sustainable bond, as well as the extension of the successful Green Technology Financing Scheme (GTFS) to encourage the private sector to participate in green technology.
  5. Customer behaviour – PwC’s Global Consumer Insights Survey 2020 research revealed a clear embrace of sustainability and a sense of civic duty. 52% of our respondents in Southeast Asia say they expect businesses to be accountable for their environmental impact. 52% of them also say they would avoid the use of plastic whenever possible.

ESGSource: CFA Institute

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The COVID-19 lesson: Wise up for corporate sustainability in Malaysia

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The prolonged COVID-19 pandemic in Malaysia with the continuous lockdown measure implementation has caused liquidity issues to the businesses in Malaysia. The MCO, EMCO, CMCO, FMCO… if you are familiar.

Of course, there are some sectors that are flourish during this pandemic such as medical equipment, hand gloves to name a few.

In fact, this pandemic is a wake-up call for corporate sustainability in Malaysia.

Before its too late!

The COVID-19 pandemic highlighted the impact of our businesses and lifestyles have on the environment and biodiversity. Besides systemic inequalities, such as access to healthcare and green spaces, internet connectivity, work and education opportunities. These issues will have significant implications on the sustainability of resources in our communities and wider society.

According to PwC Malaysia,  this is an opportunity for corporates to build trust with their stakeholders, by showing their commitment to addressing ESG issues before it’s too late. ESG is the acronym for Environmental, Social, and (Corporate) Governance

A combined effort from businesses, the government, and the public is needed to drive improvements in environmental and social practices.

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A recovery path to circular economy post COVID-19

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In the response to the Covid-19 pandemic, Government around the world has put in a lot of money for a recovery that is in alignment with other global challenges. Many see a rare opportunity to build a resilient and low-carbon economic recovery. Achieving this goal requires governments to take critical actions that not only focus on safeguarding national economies during crises, but that also pave the path toward a wider and more resilient economic transformation against future global risks.

The circular economy, as an instrument to decouple economic growth
from resource use and environmental impact, opens up the way for
a resilient recovery.

In fact, circular economy not only addresses the negative impacts of the
linear economy, but more importantly it represents a systemic shift
that builds long-term resilience, generates business and economic
opportunities, and provides environmental and societal benefits.

A circular economy offers a tangible pathway towards a low-carbon and prosperous recovery.

Therefore, circular economy remains highly relevant as new sources of growth and economic renewal.

Achieving such a recovery will require the rethinking, resetting, and redesigning of the economy from one that is merely reactive in a time of
crisis to one that is prosperous, inclusive, low-carbon, and mitigates the risk of future crises.

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Looking after our mental health

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According to World Health Organization (WHO), mental health is essential to our overall well-being and as important as physical health. When we feel mentally well, we can work productively, enjoy our free time, and contribute actively to our communities.

In this unprecedented times when the world is fighting against COVID-19, there are more unforeseen changes impacted our life. Thus, its vital to look after our mental health.

Here are tips and advice from WHO to promote mental health:

  • Keep informed. Listen to advice and recommendations from your national and local authorities. Follow trusted news channels, such as local and national TV and radio, and keep up-to-date with the latest news from @WHO on social media.
  • Have a routine. Keep up with daily routines as far as possible, or make new ones.
  • Get up and go to bed at similar times every day.
  • Keep up with personal hygiene.
  • Eat healthy meals at regular times.
  • Exercise regularly.
  • Allocate time for working and time for resting.
  • Make time for doing things you enjoy.
  • Minimize newsfeeds. Try to reduce how much you watch, read or listen to news that makes you feel anxious or distressed. Seek the latest information at specific times of the day, once or twice a day if needed.
  • Social contact is important. If your movements are restricted, keep in regular contact with people close to you by telephone and online channels.
  • Alcohol and drug use. Limit the amount of alcohol you drink or don’t drink alcohol at all. Don’t start drinking alcohol if you have not drunk alcohol before. Avoid using alcohol and drugs as a way of dealing with fear, anxiety, boredom and social isolation.There is no evidence of any protective effect of drinking alcohol for viral or other infections. In fact, the opposite is true as the harmful use of alcohol is associated with increased risk of infections and worse treatment outcomes.And be aware that alcohol and drug use may prevent you from taking sufficient precautions to protect yourself again infection, such as compliance with hand hygiene.
  • Screen time. Be aware of how much time you spend in front of a screen every day. Make sure that you take regular breaks from on-screen activities.
  • Video games. While video games can be a way to relax, it can be tempting to spend much more time on them than usual when at home for long periods. Be sure to keep the right balance with off-line activities in your daily routine.
  • Social media. Use your social media accounts to promote positive and hopeful stories. Correct misinformation wherever you see it.
  • Help others. If you are able to, offer support to people in your community who may need it, such as helping them with food shopping.
  • Support health workers. Take opportunities online or through your community to thank your country’s health-care workers and all those working to respond to COVID-19.

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How can business response to COVID-19?

holding card with COVID-19

“This is not just a public health crisis; it is a crisis that will touch every sector. So, every sector and every individual must be involved in the fights,” quoted by Dr. Tedros Adhanom Ghebreyesus, Director-General of World Health Organization (WHO).

The coronavirus diseases (COVID-19) pandemic posed a massive global health disaster, economic and social crisis. What are the impacts of COVID-19?

During a critical period like the COVID-19 pandemic disaster filled with fear and uncertainty, the people worldwide are strongly committed to working together and supporting each other in every way possible, including business communities.

Businesses can engage in CSR programs

Business should endure various initiatives to help their employees, customers, and communities during this crisis period through the
various CSR programs as they did before.

CSR is treated as an excellent tool for accomplishing sustainable development by offering a win-win strategy. CSR also permits companies to enhance their financial performance and, at the same time, deliver abundant social benefits that can fuel the people to survive during the COVID-19 pandemic period and overcome the crises.

These CSR actions confirmed that the business and society are intertwined (McLennan & Banks, 2019), as well as it is the best neighbor of the community and vice versa.

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10 Responsible Business Conduct (RBC) that help business to navigate through COVID-19 crisis!

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The COVID-19 crisis has posed significant impact to the people, planet, and society. The implementation of global standards of the responsible business conduct (RBC) is important to identify, mitigate and address these negative impacts.

How to implement responsible business conduct (RBC)?

The implementation of RBC will help the company or business to navigate through the storm of COVID-19, by avoiding and addressing the potential adverse impacts on people, planet and supply chain. Companies that take proactive RBC steps to address the risks of COVID-19 are likely to build more long-term value and resilience.

The following RBC issues are seen as relevant in helping business to respond to and recover from the supply chain crisis and operational shocks:

1.Social dialogue

For social dialogue, industrial relations and stakeholder engagement issue, the effective industrial relations and stakeholder engagement, including direct engagement with workers and their representatives can help to identify short-term or long-term solutions to address the cost-cutting pressure, and can help to smooth operation during recovery phases.

2. Worker leave

For worker leave, benefits and access to healthcare issue, companies that have robust practices on worker benefits are more likely to retain critical employees’ skills and know how during the crisis and able to recover quicker in its medium- and long-term effect, as long as the companies can survive in the short term.

3. Employee’s benefits and access to healthcare

Companies with strong employee benefit package can boost worker’s morale and trust, which will increase productivity and worker retention.

4. Environmental, health and safety management

On environmental, health and safety management, firm which has robust health and safety management practices, can quickly response to the COVID-19 threats quicker.

5. Corporate governance related to disaster preparedness, continuity and contingency planning

On the corporate governance related to disaster preparedness, continuity and contingency planning side, leadership and clear defined responsibility for disaster, continuity and contingency planning at the senior management are important to deal with the recovery from the crisis.

Investor and consumer will pay attention on the business leaders action towards crisis management, a strong leadership will rise in times of crisis and able to build confidence among the stakeholders.

6. Supply chain management

On supply chain management; the information from supply chain due diligence can be used to understand the impact in the supply chain and manage disruptions.

7. Disclosure

On disclosure, shareholders, regulators and the public will expect more frequent and transparent reporting on financial, environmental, social and governance risks of the companies and also the contingency plan in place.

8. Stock price and long term value

Reports suggest that COVID-19 crisis and market volatility has increased investor interest in environmental, social and governance (ESG) issues.

9. Access to emergency funds and capital

Companies that have put in place contingency planning which takes into account of RBC issues are in better position to access fresh fund, special emergency funds and relief program.

10. Mitigation of crisis related legal risks

Taking proactive RBC action can help to mitigate legal risks.

11. Protection of brand value and reputation.

The RBC practices are closely associated with brand strength and corporate reputation, which also apply in times of crisis.

All in all, the COVID-19 has created major risks to companies, and companies that apply RBC will see to be more resilient in the long term and help in value creation.

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What are the top 3 challenges that all business faces during COVID-19?

COVID-19

The Impact of COVID-19 on business

The COVID-19 pandemic has impaired the economy and life of the business. To stop the spread of the COVID-19 crisis, Government worldwide has taken the steps to shut down economic activities, lock down measure to stop and contain the pandemic. The COVID-19 has exposed major vulnerabilities of company operations and supply chain linked to the conditions of work and disaster planning. What is new model of economy, click here!

holding card with COVID-19
The negative impacts of COVID-19 on companies worldwide can be seen in economically, socially, and environmentally.

What are the top 3 challenges that all business faces during COVID-19 pandemic?

1. Financial crisis

The most direct impact of COVID-19 to the business worldwide is the financial crisis. The COVID-19 has caused financial distress and liquidity problems for many businesses worldwide due to the reduction or cancellation of businesses. This has caused a lot of job cut and job loss. Some companies that impacted financially chose to retain employees, but also implement measures such as salary reduction or pay cut. The termination of job has increased the unemployment figures emerging from impacted countries. Check out 3 ways to achieve sustainable development.

2. Heath and safety of employees

On the other hand, for companies that can continue business activities in the midst of COVID-19 pandemic, protecting the health and safety of the employees is becoming the top priority. However, many business struggles to identify the right balance of measures and safeguards to protect the workers from being exposed to the risk of the virus, including limit physical interaction at work, enhanced sanitary measure or encourage teleworking.

As a result of that, there are many COVID-19 cases that spread from the workplace. The continued circulation of goods and workers create the potential vector of contamination and may lead to negative environmental impacts. Increase dependent on digital communication technologies also create new risks to privacy and misuse of personal and proprietary data.

3. Disruption on supply chain

Besides the impacts on the business operation, business also faced major disruptions in the supply chain. Both demand and supply side disruptions has intensified the socio-economic impact. Suppliers may face the difficult situation to continue their activities and honor contract due to order cancellation or delay in payment. 

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