Environmental, social and governance (ESG) has been gaining a lot of attention and has become the latest buzzword in business sustainability talk. Given the global focus, Malaysia Government has also been spearheading this movement to bring forward the sustainability agenda as part of a holistic and inclusive economic approach. Playing their part, CIMB Bank has recently launched CIMB GreenBizReady, a solution provider which will help to accelerate and catalyse the shiftment of Malaysian small and medium enterprises (SME) towards the green economy.
Let’s start with understanding the meaning behind ESG. Environmental, social and governance refers to the impacts and consequences of running a business. This standard is to be more aware of how business operations impact the environment, the ecosystem, the livelihood of others including the habitats of the communities and how it impacts society as a fabric. ESG standards aim to provide solutions to issues like climate change, inequality at the workplace, ethical labour practices and so on. What started as an emerging trend a few years ago has now become the social standards on how to operate businesses. By implementing ESG, we get to identify and understand the consequences of our business operations beyond the revenue and the profit and to ensure those impacts also serve to our profitability.
Regional Head of CIMB Islamic Commercial Banking, Hussam Sultan stated that every sector of the economy should consider ESG implementation not due to any external forces but because of how the market is changing towards a smarter way of doing business. “If you want to remain in business for the next decade and beyond that, you have to be able to read the global market right and this is one of the ways of doing that, like how it is changing.”
Azmir Abdullah, the Director of CIMB Islamic Business Development Commercial Banking shares a recent study that shows 60%- 70% of Malaysian exports are to companies with net zero targets which means in the future, ESG-compliant companies will get to expand their business wider as the demand for goods and services that meet the standards of ESG are increasing. “Companies that ignore ESG will be deprived of funding, so whether its bank loans or equity fundings, going forward this is something that we cant ignore. This transition will not be an easy journey but it is necessary to see the positive sides of it and turn any of the challenges into opportunities for SMEs,” he added.
Fara Ellizia, the General Manager of MIWA Manufacturing Sdn Bhd points out that ESG is relevant and crucial in this era especially as a manufacturer that is trying to meet customers’ demands, it is very apparent for companies to open up to the values and practices of ESG. “My advice to other SMEs who want to start with ESG is to just start. Start with anything you can do. Even a small start would do such as turning off the light when you’re not in the office or not in the pantry, that is a start. Working with the CIMB Greenbiz initiative will definitely help you put into perspective where you should be going and it is also free so start there,” she added.