KUALA LUMPUR: Capital Markets Malaysia (CMM) and PwC Malaysia have launched a report titled “Corporate Malaysia’s Journey Towards a Sustainable Supply Chain”, which assesses the current state of the country’s supply chain in terms of sustainability.
In a statement, CMM, an affiliate of the Securities Commission, said the report highlights opportunities to be gained from greater engagement of small to medium-sized enterprises (SMEs), which are typically the largest contributors to the supplier ecosystem.
To date, SMEs make up the majority of suppliers to public-listed companies (PLCs), contributing 38% of the country’s gross domestic product (GDP) and 48% of the national employment rate.
The report presents three key areas that PLCs must consider to adopt greater supply chain sustainability – governance and integration, engagement and incentives, as well as data and reporting.
“PLCs need to lead by example based on their capabilities and exposure to international market expectations.
“While Malaysian PLCs have made significant progress in incorporating ESG principles as part of their business strategies, there is still much to be done to strengthen sustainability practices in their supply chains,” said CMM General Manager Navina Balasingam.
He noted that among the top 100 companies in Bursa Malaysia, 80% have ESG governance and oversight to develop sustainable supply chains, but only 55% have included supply chain risk as part of their overall corporate risk and strategy.
Meanwhile, the absence of a standardized lens to assess and measure listed companies, mainly SMEs, presents a challenge for corporations looking to measure and reduce their Scope 3 emissions, he said.
“With this report, we aim to provide examples of initiatives and actions that can be taken by both private and public sector actors to support sustainability within supply chains.”
Andrew Chan, PwC Malaysia’s sustainability and climate change leader for South East Asia, said companies need to rethink their relationships with suppliers beyond contractual transactions to motivate suppliers to adopt sustainability practices and improve their performance.
“We are also seeing a number of public sector initiatives to support the transition, including working with SMEs to encourage the adoption of low carbon practices, which is certainly encouraging.
“However, this needs to be backed up by investing in the right infrastructure and policies to allow Malaysian companies to truly transform their supply chains and create long-term value for their stakeholders beyond helping local suppliers meet the stringent sustainability requirements required to participate.” global supply chain,” he said.
CMM said it is developing a simplified ESG disclosure guide specifically tailored for SMEs, which is due to launch in the fourth quarter of 2023.
According to Navina, the guide will provide practical guidance and baseline disclosures expected of SMEs with ESG aligned with international standards, to encourage greater transparency and improve the quality of ESG disclosures by SMEs.