Sustainability
Bursa Malaysia has always advocated corporate responsibility as key to sustainability. Today, sustainability, which supports stakeholder value creation, should be the main focus of every responsible company.
Tip of the Week: Approximately only 10 percent of every landfill can be cleaned up.
Strategy & Embedding Sustainability
Integrating & Managing Sustainability
A good sustainability Management Framework will provide a company a structured approach to implement a robust sustainability management mechanism in their organisation.
There should be clear internal and external communication on the company's sustainability goals and mission of the company.
The company's performance management systems and training and development programmes should be aligned to the sustainability activities of the company to support effective monitoring of sustainability activities and measuring of the associated impacts.
Key Components of a Sustainability Management Framework1
Corporate Strategy & Sustainability Strategy
Companies should ensure their sustainability strategy and objectives are clearly defined and linked to their overall corporate strategy, nature of business & stakeholder expectations. A good sustainability strategy is aligned with the company's overall growth and operational plan to ensure it makes business sense. In Malaysia, companies are beginning to allocate a separate budget for sustainability to ease the implementation, measurement and tracking of sustainability initiatives.
Sustainability Initiatives
Typically, a company's sustainability initiatives fall into one the four sustainability dimensions as highlighted in Bursa Malaysia's sustainability framework in the table below.
The sustainability portfolio balance should ideally reflect the company's desired sustainability strategy. As and when this strategy changes, the portfolio should be refined and periodically assessed for suitability.
Community
Refers to invested or donated money, time, products, services, influence, management knowledge and other resources that positively impact deserving local communities
Selected Community indicators:
- Total community investment (RM)
- Number of hours spent on community initiatives
- Number of community initiatives
Workplace
Activities aimed at maintaining high standards of recruitment, development and retention of employees
Selected Workplace indicators:
- Lost time injuries
- Total energy consumption
- Average training hours per employee
Environment
Activities aimed at conserving ecosystems and biodiversity and managing the impact of a company's operations on the environment
Selected Environment indicators:
- Total greenhouse gas emissions (CO2-e)
- Total energy consumption
- Total water consumption
Marketplace
Activities aimed at encouraging and influencing shareholders, suppliers, vendors and customers to act in a sustainable manner across the value chain to support company's own sustainability agenda
Selected Marketplace indicators:
- Number of supplier audits
- Percentage of suppliers meeting environmental criteria
- Customer satisfaction results
Commonly used sustainability Dimensions2
Corporate Governance and Sustainability
Stakeholders want greater transparency across a company's corporate activity and specifically on how profits are generated. This has led to a greater link between Corporate Governance and sustainability. The role of the Board of Directors has to evolve to include strategic oversight of the social and environmental performance of the company and review of non-financial reports. Directors are now recognising the need for good corporate citizenship in the communities in which they operate, whether locally or abroad; as good sustainability can enhance and protect the reputation of a company and its license to operate.
Sustainability Measures
Sustainability measures are developed to track the performance of sustainability initiatives implemented by a company and the effort involved, which should be agreed by the owners and relevant internal stakeholders. More progressive companies will seek to validate these measures with key stakeholders upfront.
A combination of process and impact measures should be used to monitor sustainability initiatives. Impact measures can highlight economic, social and/or environment impact of the company's sustainability initiatives.
For more information on process and impact measures, please refer to the section on 'Measuring sustainability Impact' .
Structure, Process, People & Infrastructure
Addressing sustainability as a major business issue requires broader changes which need to be embedded within a company's structure, processes, roles of its people and infrastructure.
The sustainability roles and responsibilities for an organisation should be clearly defined and institutionalised including updates to job descriptions for existing roles impacted by sustainability. Effective management of a sustainability framework can be supported by a dedicated sustainability function in an organisation or a well defined virtual team, comprising representatives across the organisation.
A formal sustainability function works well in companies that are seriously adopting sustainability as a strategic issue, to help drive momentum across all divisions. This provides the company the required visibility to all staff in the organisation and will aid in the change management process to embed a sustainability culture in the company. Regardless of the structure adopted, sustainability needs to be driven by Senior Management or a member of Senior Management. Some companies appoint a person in charge of sustainability who reports directly to the CEO in order to gain access to the Board. Ultimately, the Board should be responsible for the company's sustainability practices and there should be a set of KPIs to govern the Board's action
Non-Financial Reporting & Assurance
A company's sustainability reporting should be transparent and a fair reflection of the sustainability initiatives undertaken by the company to enable it to constructively engage stakeholders and seek to improve upon its impact and further enhance its reputation and value. An independent verification of the company's sustainability report to globally-accepted standards would increase its credibility amongst stakeholders.
1 PricewaterhouseCoopers
2 Adapted from Bursa Malaysia CSR Framework, 2007