Powering Business Sustainability Bursa Malaysia

POWERING
BUSINESS
SUSTAINABILITY
A GUIDE FOR DIRECTORS
DISCLAIMER
This Powering Business Sustainability A Guide for Directors (Guide) is issued
by Bursa Malaysia Berhad to assist
Boards in applying the principles and good
practices of corporate responsibility and
sustainability.
This Guide is not exhaustive in its
coverage. Boards must exercise
discernment and diligence in the
use of this Guide.
Boards and company officers should
obtain professional advice regarding any
specific set of facts or issues.
Whilst Bursa Malaysia has used reasonable
endeavours to ensure that the information
contained in this Guide are accurate,
correct or obtained from sources believed
to be reliable, the information herein is
provided on an as is basis without any
representations or warranties of any kind.
In no event shall Bursa Malaysia or any
of its subsidiaries be liable in respect
of any claim arising out of or relating to
this Guide. This Guide shall be read in
conjunction with relevant laws,
regulations and/or rules.
All rights reserved. The Bursa Malaysia
name and logo are registered trademarks.
2 / POWERING BUSINESS SUSTAINABILITY
FOREWORD
Sustainability is not a fad

but has become critical
to business strategy, risk
management and more
importantly, must be a priority
issue in boardroom agenda.
I am delighted to be writing
the introduction to Bursa Malaysias
Powering Business Sustainability A Guide for Directors. Through this
Guide, we strive to raise the bar in
terms of practices and reporting
on sustainability practices of listed
companies.
Bursa Malaysia, as a frontline
regulator and also as a listed
company has commenced the
sustainability journey and this
Guide is in line with our
continuous efforts to enhance the
competitiveness and attractiveness
of Bursa Malaysia as a listing
and investment destination. The
increasing interest from investors
to evaluate sustainability risks and
opportunities in their investment
decisions should not go unnoticed.
Sustainability is not a fad but

has become critical to business
strategy, risk management
and more importantly, must be
a priority issue in boardroom
agenda. In this context, each
listed companys overriding
goal should be to operate
effectively towards sustainable
businesses.
As leaders for listed companies,
directors must have the
commitment and passion
in driving the sustainability
agenda and integrate it in the
overall business strategies and
organisation culture.
In conclusion, as Corporate
Malaysia, we have the
responsibility to ensure that
we operate a sustainable
and efficient business
towards enhancing long term
shareholders value. I am
confident that with this Guide,
you will come away knowing
more about the essentials
in sustainable practices and
embrace them towards a
sustainable and profitable future.
TUN MOHAMED DZAIDDIN

HJ ABDULLAH
CHAIRMAN
BURSA MALAYSIA BERHAD
Contents
06
12
26
Acknowledgements
Why is Sustainability
Relevant?
Enabling Effective
Sustainability in your
Organisation
About this Guide

Executive Summary
14 What is sustainability?
16 The case for
sustainability in
business
22 What investors want
28 Defining your
sustainability strategy
30 Integrating and
managing sustainability
34 Enabling sustainability in
your organisation
40
48
58
Prioritising your
Sustainability Focus Areas
42 Common focus areas
Engaging Stakeholders
Measuring and Reporting
50 Effective stakeholder
engagement
52 Information needs of
stakeholders
54 Identifying and
engaging stakeholders
60 Measuring your
sustainability impact
61 Overview of
sustainability reporting
process
64 Assurance for credibility
ACKNOWLEDGEMENTS
Bursa Malaysia
would like to express
its deepest gratitude
to all who made the
publication of
Bursa Malaysias
Powering Business
Sustainability - A
Guide for Directors
(Guide) possible.
We would especially like to thank

PricewaterhouseCoopers (PwC)
Malaysia for sharing their insights,
believing in the value of taking this
beyond just another job, and working
with us towards a greater good.
We are also grateful to a number of
individuals and organisations who
have contributed their views and best
practices during the development of
this Guide, including sustainability
specialists from Securities Industry
Development Corporation (SIDC),
ACCA (Association of Chartered
Certified Accountants), CSR Asia,
Khazanah Nasional Berhad, Financial
Times Stock Exchange (FTSE), Dow
Jones, Association for Sustainable
and Responsible Investment in Asia
(ASrIA) and directors and sustainability
practitioners of public listed
companies. Bursa Malaysia would like
to thank all involved for their support
throughout, without which we could
not have made this publication happen.
ABOUT THIS GUIDE
This Guide has

been developed to
assist directors in
understanding the
growing relevance of
sustainability and how
companies can embed
sustainability within
the organisation.
The primary objectives of the Guide are to:

enhance awareness of sustainability
and its relevance to companies
provide guidance on embedding
sustainability within an organisation
share sustainability good practices
highlight key areas for directors to oversee
The level of content in this Guide is intended
to support the Board in discharging its role in
ensuring the sustainability of the organisation,
where the Board should provide strategic
guidance and oversight of management.
This includes reviewing and approving the
companys sustainability strategy and ensuring
transparent sustainability reporting.
The sustainability agenda is being driven
actively through a combination of corporate
conscience, stakeholder pressure and
government policies. As such, sustainability
frameworks and standards will continue to
evolve. This Guide references the sources
where information have been extracted from
and companies should refer to the relevant
source documents for further details and
any updates. The information, examples and
questions for management included in the
Guide are designed to provide guidance only,
and are not exhaustive.
The Guide is structured into five chapters with each

chapter addressing a key sustainability concept.
Chapter 1
Chapter 3
Chapter 5
Highlights the relevance of

sustainability to businesses.
Companies with good
sustainability performance
have the potential to protect
and enhance their brand and
intangible value. Sustainability,
when viewed strategically, can
act as a catalyst for innovation
and help identify new business
opportunities, reduce risks and
improve cost efficiencies.
Summarises the common

sustainability issues faced by
companies in different industry
sectors. Companies need to
understand the issues most
relevant to their stakeholders
and themselves and actively
manage and report on them.
Introduces measuring and

reporting in order to disclose
sustainability performance.
Good practice reporting
emphasises the impact of
sustainability initiatives and
are transparent, credible and
reflect a balanced picture of the
companys activities against
performance. Companies
are increasingly sharing
their reporting roadmap that
highlights their reporting
aspirations and progression over
the longer term.
Chapter 2
Elaborates on the importance
of establishing a sustainability
strategy that is aligned to
stakeholder expectations,
corporate strategy and values
in order to maximise impact. To
effectively manage sustainability,
companies need to integrate
it into management culture
and operations. This chapter
summarises the supporting
pillars to embed sustainability
within the organisation.
Chapter 4
Highlights the stakeholder
management process and the
benefits to companies in
proactively engaging their
stakeholders. Sustainability is
creating a shift in focus from
shareholders to stakeholders.
It requires companies to increasingly
identify their key stakeholders,
engage them to support the
development of a relevant
sustainability strategy and to
input into the effectiveness of
their sustainability programmes
and reporting.
Further guidance can

be found on Bursa
Malaysias Sustainability
Knowledge Portal at
www.bursamalaysia.com/
sustainability/
EXECUTIVE
SUMMARY
Introduction to
Sustainability
Sustainability generally
refers to the adoption and
application of environmentally
responsible practices,
sound social policies and
exceptional governance
structures in order to
minimise risks and volatility
and to enhance the longterm development impact of
corporate activities1.
Sustainability in business,
therefore means managing
a company in a way that
takes into account the social,
economic and environmental
aspects that can be referred
to as the triple bottom line
or People, Planet, Profit.
Sustainability is about
obtaining a good balance
of these three aspects.
Companies are now focused
on being responsible to
stakeholders, not just
shareholders, as stakeholders
can also have a big impact
on the value of a company.
In 2006, Bursa Malaysia
launched its Corporate
Social Responsibility (CSR)
Framework to highlight to
the public-listed companies
(PLCs) that CSR is more than
philanthropy and community
initiatives. Bursa Malaysia
has always advocated CSR
as being key to sustainability.
Companies are seeing
increasing benefits from
sustainability, e.g. cost
reduction, better risk
management, attracting
and retaining talent.
Sustainability has also been
identified as one of the three
pillars in the New Economic
Model and is key to support
the nations transition to a
high-income economy.
1. Sustainable Stock Exchanges, Real
Obstacles, Real Opportunities, 2010
A. ENABLING EFFECTIVE
SUSTAINABILITY IN YOUR
ORGANISATION
Sustainability should not
be viewed on a standalone
basis and separately from
the way an organisation
operates. Companies gain
the most benefits when
they successfully embed
sustainability practices
within the organisation.
The following are some of
the key steps to embed
sustainability in an
organisation. The process
is a continuous loop, and
does not end at step 7 or
necessarily start at step 1.
1. Agree sustainability
focus areas
Conduct inventory of existing
sustainability initiatives and
performance
Assess sustainability issues
most important to the key
stakeholders as well as the
company, challenges and
focus areas
Ensure alignment with the
companys overall strategy
and define sustainability goals
B. PRIORITISING
YOUR SUSTAINABILITY
FOCUS AREAS
2. PricewaterhouseCoopers Sept 2010, adapted

with permission from John Zinkin, 2007
Identify resources that

are essential to achieve
sustainability goals
Includes financial assets,
property, employees, raw
materials, customers and
intellectual property
3. Formalise responsibilities
and reporting structure
Formalise sustainability
reporting and governance
structure
Clearly define persons-incharge and their roles and
responsibilities; update
job descriptions and key
performance indexes
4. Set evaluation criteria
Define and agree on

criteria to assess feasibility
of sustainability projects
Decide if sustainability
projects should be
implemented based on
feasibility study
5. Use relevant measures

to monitor progress of
sustainability initiatives
Define metrics / dashboard
required for different
stakeholders, including
Board of Directors to assess
performance
Communicate sustainability
targets and metrics to relevant
stakeholders
6. Develop guidelines and

templates for sustainability
reporting
7. Develop a stakeholder
engagement plan
Develop internal reporting

templates and guidelines;
including processes and
controls
Compile and analyse data
Develop sustainability report
Consider external verification/
assurance
Define role of stakeholders

and companys strategy/
guidelines
Identify key stakeholders
and their main concerns
Prioritise and map the
stakeholders and their
concerns
Review and report outcome of
stakeholder engagement and
next steps
Community
Environment
Marketplace
Workplace
Raw materials processing
Social inequity
Abuse of natives
Community health & safety
Depletion
Environmental damage
Use of energy
Corruption
Child labour
Human rights
Standards for suppliers
Facilitation payments
Discrimination
Union rights
Health & safety
Working hours
Transport & logistics
Social inequity
Pollution/Spills
Emissions
Use of energy
Corruption
Human rights
Pollutions/Spills
Emissions
Use of energy
Use of water
Use of raw materials
Use of packaging
Waste management
Corruption
Child labour
Human rights
Production
Value chain
A companys sustainability focus

is dependent on the business
impact of their operations on
the Community, Environment,
Marketplace and the Workplace
as well as stakeholders
expectations and corporate
strategy. Assessing sustainability
issues along the companys value
chain is a useful approach to
avoid missing the identification
of key sustainability issues in
determining the sustainability
focus areas. The following are
common sustainability issues that
are relevant across any sector2:
2. Establish annual
resource needs
Discrimination
Union rights
Health & safety
Working hours
Distribution
Social inequity
Destroying local capability via access to
better products/processes
Community healthy & safety
Pollution/Spills
Emissions
Use of energy
Corruption
Human rights
Marketing and sales
Social inequity
Social inclusion
Green marketing
Sustainable packaging
Corruption
Truthful selling
Ethical marketing
No logo attack
Consumer awareness
Fairtrade
Discrimination
Union rights
Health & safety
Working hours
Management policies
Support education
Stakeholder engagement
Energy & efficiency

Climate change strategy
3 Rs (Reduce, Reuse & Recycle)
Environment management/policy
Operational eco-efficiency
No corruption
Obey the law
Avoid politics
Customer relationship management
Brand management
Innovation management
Avoid facilitation payments
Responsible government lobbying
Corporate governance
Diversity & inclusion

Meritocracy
Respect union rights
Good health & safety
Good working hours
Pay for performance
Health & awareness programmes
Talent attraction, retention & development
C. ENGAGING
STAKEHOLDERS
Stakeholders, and not just
shareholders, are becoming
increasingly interested in the
performance of a company.
Stakeholders are the individuals or
groups that are affected by, or can
affect an organisation, and they
include regulators, customers,
employees, and investors.
Organisations are expected to
meet stakeholders expectations
across financial, environmental
and social dimensions.
A robust stakeholder engagement
approach encourages a company
to communicate openly which
makes it easier to build trust
between a company and its
stakeholders. Today, leading
companies have developed
an appreciation that effective
stakeholder engagement can
contribute to learning and
innovation in products and
processes:
ROLE OF
THE BOARD
Accountability and transparency

Account to stakeholders for the
organisations actions
Identify relevant social and
environmental issues to
report against
Assuring the companys
stated performance against
sustainability issues
This list is not exhaustive and should be customised to reflect the nature of the business.
Enabling Effective Sustainability

Discuss and approve the companys
sustainability strategy and alignment
to company strategy
Risk management
Better relationships within
the community and country
Understand societal
sustainability concerns
which may adversely impact
operations
Identify emerging issues
that may influence market
conditions
Manage potential brand risks
and associated costs
View sustainability as part of the

Boards duty of providing oversight
and managing strategic, social, ethical
and environmental risks for better
decision-making
Strategic direction
Understand impact of
operations on stakeholders &
influence stakeholders wield
Prioritise sustainability
issues based on materiality
Innovate and generate
new business
Establish credibility as a
partner in solutions
Get external feedback and
advice from stakeholders
Develop Sustainability Terms of

Reference for the Board
Delegate responsibility for social and
environmental oversight to Board
committees / specific director where
appropriate
Companies that measure, manage

and communicate their social and
environmental performance in a robust
manner tend to understand how
to improve their processes, reduce
their costs, comply with regulatory
requirements and stakeholder
expectations and take advantage of
new market opportunities. Companies
in Malaysia are increasingly producing
standalone sustainability reports with
greater detail on performance, targets
and aspirations.
Review and sign-off on material sustainability

issues for the company to manage
Oversee management of material sustainability
issues through robust processes and controls
Seek regular updates and measures on
management of material sustainability issues
Engaging Stakeholders
Discuss results of assurance

with assurance providers
and management and
oversee the required key
improvements
Ensure management considers investor

and other stakeholder needs to balance
between shareholder value and non-financial
performance
Report sustainability
performance
Clearly define the parameters to be

covered, such as the rationale for
the companys reporting, the scope of
coverage, including reporting
framework to adopt, level of assurance
and agreed focus areas
Define reporting boundaries and
materiality
Identify key functions and roles relevant
for sustainability information
Develop well-defined reporting
templates to collate and manage data, if
existing mechanism not already in place
Identify gaps between

compiled data and the
defined parameters
Prioritise gaps identified
Agree how and when to
address gaps
Obtain approval from

Board of Directors before
finalisation of report
Publish performance against
commitments and targets.
Share future targets
Explain any gaps in data/
shortfall against targets and
rectification measures
Consider obtaining
independent assurance on
report
Cascade understanding that

sustainability brings longterm value to the company
Lead specific stakeholder engagements to

gather feedback and ideas
Approve budget for sustainability

initiatives and commitments
Assess, prioritise and

address sustainability gaps
Review performance
of key sustainability
initiatives (including
external comparisons) and
recommend improvements
Encourage transparent
reporting and assurance to
increase credibility
Monitor output of stakeholder engagements

and make decisions to improve the
companys sustainability position and manage
environmental & social risks
Define parameters, identify

and collate data
Measuring, Reporting
and Assurance
Ensure alignment on purpose of stakeholder

engagement and readiness to manage the risks
and issues raised
Include sustainability as part of the

Board agenda with the Board making
decisions about the companys
sustainability position and direction
Set KPIs on sustainability for the

Board and Senior Management
D. MEASURING
AND REPORTING
Prioritising your
Sustainability Focus Areas
Assess relevance of report

in attracting institutional
investors and socially
responsible investors
WHY IS
SUSTAINABILITY
RELEVANT?
13
What is sustainability?
In 1987, the United Nations World Commission on

Environment and Development (the Brundtland Commission)
described sustainable development as Development that
meets the needs of the present without compromising the
ability of future generations to meet their own needs1.
Sustainability generally refers to the adoption and application
of environmentally responsible practices, sound social policies
and exceptional governance structures in order to minimise
risks and volatility and to enhance the long-term development
impact of corporate activities2. Sustainability in business,
therefore means managing a company in a way that takes
into account the social, economic and environmental aspects
that can be referred to as the triple bottom line or People,
Planet, Profit. Sustainability is about obtaining a good balance
of these three aspects.
1. World Commission on Environment and Development, Our Common Future, 1987

2. Sustainable Stock Exchanges, Real Obstacles, Real Opportunities, 2010
3. Prime Ministers Office, www.pmo.gov.my, accessed March 2010
4. Economist Intelligence Unit, Doing Good: Business and the Sustainability Challenge, 2008
5. Securities Commission Malaysia, Speech at the Starbiz-ICR Malaysia Corporate
Responsibility Awards 2009, March 2010
It is clear that we
need to move CSR
up the business
agenda and embed
it into the DNA of
every company. This
presents an enormous
challenge, as well as
a huge opportunity to
get things right from
the start3.
Dato Sri Najib Tun Razak
Prime Minister of Malaysia
Leading global companies have
long moved beyond Corporate
Social Responsibility (CSR) as it
was perceived that the focus was
more on the social aspects of
the business its people and the
community, and had limited impact
on stakeholder value creation.
In 2006, Bursa Malaysia launched
its CSR framework for public listed
companies (PLCs) to highlight that
CSR is more than philanthropy
and community initiatives. Bursa
Malaysia has always advocated
CSR as being key to sustainability.
Today, sustainability, which
supports stakeholder value
creation, should be the main focus
of every responsible company.
Business opinion polls and corporate

behaviour both show increased levels of
understanding of the link between responsible
business and good business4. Also, institutional
investors, investment managers and financial
service providers recognise that sustainability
activities that integrate broader environmental
and societal concerns into business strategies
and performance can drive superior operating
performance and be the hallmarks of good
management and corporate governance.
Sustainability is not new some aspects
of sustainability are already embedded in
businesses. Those that adhere to the Shariah
principles, for example, adopt ethical practices
that are in line with sustainability.
Corporate Responsibility
is much more than
philanthropy: it is not about
what a company does with
its money once it has made
it; it is about how it makes its
money. Few companies can
choose to ignore this finding
if they want to thrive in the
new business environment
and so Boards will have to
focus more on how they do
business5.
Tan Sri Zarinah Anwar
Chairman, Securities Commission
Malaysia
15
The case for

sustainability in business
The impact of
sustainability differs
between companies
and sectors, and
is dependent on
various factors. These
include the size of
the company, nature
of work undertaken,
its products,
locations, suppliers,
management,
customers and the
reputation of the
sector in which the
company operates.
There is growing
consensus on the link
between sustainability
and the success of
a business.
6. PricewaterhouseCoopers, 13th Annual

Global CEO Survey, 2010, surveying
1,198 CEOs globally
7. PricewaterhouseCoopers
Management of sustainability
in the past may have been
driven by priorities in health
and safety, quality, compliance,
brand reputation, philanthropy
and other areas. In todays
business, it encompasses the
growing expectations of society
for businesses to do their part
in addressing environment,
social and corporate governance
(ESG) initiatives. ESG issues
need to be included in strategy
discussions, risk management and
decision-making to signal their
importance and to align effective
management incentives with
financial and ESG performance. It
is a natural evolution for existing
good business practice and with
growing environmental and social
pressures, it is becoming a key
strategic issue.
Good sustainability
performance is linked to longterm returns and a lower risk
profile. For example, companies
with sustainable practices see
an increase in customer loyalty
and trust. Conversely, investors
that support a company
that focuses on short-term
profitability could have lower
returns in the long-term horizon.
Sustainability is increasingly
being used as a framework by
businesses to help manage
change related to environment
and social issues, including
new technology, government
policies, consumer demand;
and to make decisions that
balance economic, social and
environmental impacts.
of CEOs are sensing a shift in consumers

preferences to associate with environmentally
and socially responsible businesses consumers
perceive value in a companys reputation6.
Figure 1.1: Sustainability in a

strategic context7
Market
Value
Reputation
Brand
Trust
Credibility
Integrity
Intangibles
Intellectual Capital
Book
Value
Tangibles
Figure 1.1 shows how

a companys value can
be significantly driven
by intangible value,
for example trust and
social & environmental
performance. Strategically,
being sustainable helps
protect a companys value,
and this will appear more
attractive to the companys
stakeholders and socially
responsible investors.
Customer Loyalty
Risk Management
Social & Environmental
Responsibility
Financial Capital
Physical Assets
17
Benefits of
sustainability to
businesses
Globally, corporate leaders
increasingly agree that
sustainability is simply part of
good business management and
recognise the value this brings to
the organisation. The following
highlights some of the key
benefits to companies that adopt
sustainable practices:
Enhance risk management

and brand protection
Companies need to adapt to
societal conditions, needs and
decrease the cost of access
to capital through effectively
managing governance, legal,
social, environmental, economic
and other risks. Companies that
embed sustainable practices are
able to enhance their reputation
and build goodwill with the
public and non-governmental
organisations.
Greenwash is a term used to
describe companies that may
not operate in a sustainable
manner but brand their products
and policies as environmentallyfriendly in order to gain a
competitive advantage. Amongst
key traits observed in greenwash
reporting include:
8. PricewaterhouseCoopers, Malaysias
Gen-Y Unplugged, 2009
emphasis on a narrow set

of attributes without
considering more material
environmental issues
environmental claims that are
broad and cannot be verified by
supporting information
failure to disclose the
organisational/operational
boundaries of the
environmental claims
environmental claims that may
be truthful but are irrelevant to
a companys stakeholders
Hence, it is important that
companies ensure that they
adopt sustainability for the right
reasons and report transparently
on their actions.
Increase employee
engagement
In an increasingly intense war for
talent, sustainability differentiates
a company from others and has
the potential to attract and retain
employees and foster greater
productivity. This can be the direct
result of the prestige and pride
associated with a companys
products and practices. Improved

human resource policies also
indirectly improve employee
morale and loyalty. Employees
are not only a key stakeholder
in companies sustainability
consideration, but are also
champions of a company they
are proud to work for or
be associated with. A Gen-Y
survey found that 77% of GenYs in Malaysia said they would
consider leaving an employer
whose social responsibility
values were no longer in
alignment with their own8.
Enjoy tax incentives
Increase cost savings
Improve access to capital
Companies that adopt sustainable

practices have also reported
increased cost savings through
areas such as reduced energy use
and raw material wastage, and
lower waste disposal costs.
Financial institutions are

increasingly incorporating social
and environmental criteria into
their assessment of projects and
general lending. When making
decisions about where to place
their money, investors are looking
for indicators of sustainable
management in companies in
response to pressure from their
own stakeholders to finance
more environmentally and
socially acceptable projects and
businesses.
Companies who undertake

sustainability activities may
be eligible for tax deductions,
tax exemptions and other
tax benefits depending on
the qualification criteria. The
Malaysian Government has
introduced various tax incentives
to encourage more sustainable
practices, e.g. pioneer status
and income tax exemption of
100% for generation of energy
from renewable sources and
energy efficiency activities until 31
December 2015.
19
Identify new business

opportunities
Engaging stakeholders and
drawing feedback from a diverse
audience can be a rich source of
ideas for new products, processes
and markets. Demand for more
energy or resource efficient
products is driving innovation, and
companies that respond best have
a market opportunity.
With increasing focus on labour
and environmental issues in
global supply chains, a Malaysian
company that is certified to
environmental and social
standards, for example, may
be a more attractive supplier to
particular retailers in Europe and
the US. A sustainable supply chain
will also increase foreign viability.
The history of good business has
always been one of being alert to
trends, innovation, and responding
to markets. Mainstream
advertising increasingly features
the environmental or social
benefits of products.
Differentiate from competitors

Some companies adopt
sustainability to differentiate
themselves from their competitors.
These companies offer more
sustainable products and services
to their customers, whether it is
by sustainable sourcing, products
free from animal testing or offering
future savings during the lifetime
of the product.
Engage communities positively
Good sustainability practices
can help companies build social
capital. Improved community
understanding of the company, its
objectives, and its people can help
build stronger links with society,
e.g., reduction in crime, higher
employee retention rates and
reduced disruption to operations.
Comply with regulations

and government
There is increasing regulation
related to employment and
environmental management.
Maintaining and improving
relations with governments and
regulatory stakeholders could
support a companys reputation,
especially so for those looking
to expand their operations
overseas. Strong management
of sustainability will help
companies in maintaining
their license to operate
through enhanced trust and
demonstration of responsibility.
21
What investors want
Globally, there is an increasing focus on sustainable

investment, with over 800 asset owners, investment managers
and professional service partners subscribing to the United
Nations Principles for Responsible Investment (UNPRI).
As at 31 December 2009, the 2010 European Sustainable
and Responsible Investment (SRI) Market estimates that total
SRI assets shot up to USD 7 trillion9. The socially responsible
investments market is expected to grow to USD 26.5 trillion by
2015, which is estimated to be 15% to 20% of global Assets
Under Management10.
9. Responsible Investor,
www.responsible-investor.com,
accessed October 2010
10. Robeco and Booz & Co,
Responsible Investing: a
Paradigm shift, 2008
11. Association for Sustainable and
Responsible Investment in Asia,
www.asria.org, accessed
September 2010
12. Dow Jones Sustainability
Indexes, www.sustainabilityindex.com, accessed May 2010
13. FTSE4Good, www.ftse.com,
accessed August 2010
More organisations are

committing themselves to
embedding environmental, social
and governance criteria in their
investment decisions. Regionally,
the Association for Sustainable
and Responsible Investment in
Asia (ASrIA), based in Hong Kong,
is a membership association
of financial and non-financial
companies that promotes SRI in
Asia including with its Malaysian
partners11. We are also seeing an
increasing number of sustainability
indices developed under the Dow
Jones Sustainability Indexes
series (DJSI), FTSE4Good,
Ethibel Sustainability Index and
MSCI Environment, Social and
Governance Indices series in
many countries.
The DJSI are the first global

indexes established to track
the financial performance of
sustainability-driven companies
globally. Sustainability portfolios
are managed using reliable and
objective benchmarks based
on the cooperation between
the Dow Jones Indexes, STOXX
Limited and Sustainable Asset
Management. At present, the
DJSI12 has launched the DJSI Asia
Pacific, DJSI Asia Pacific 40 and
DJSI Japan 40, DJSI Korea, and
the DJSI Korea 20 in Asia.
The FTSE4Good Indexes13 were
launched in 2001 and these
indices are the best established
within FTSEs responsible
investment range. Companies are
selected based on how well they
manage their environmental and
social risks, using criteria that
incorporate globally recognised
sustainability standards.
An overview of FTSE4Good
and Sustainable Asset
Managements screening criteria
when assessing companies:
FTSE4Good14
Sustainable Asset
Management (SAM)15
Environmental Criteria
Environmental Dimension
SRI products with

embedded environmental
criteria
Engagement programme
Environmental credit risk
assessment
Integration of financial and
environmental factors
Social & Stakeholder Criteria
Equal opportunities
Diversity policies
Management systems
Human Rights Criteria
Public policies
Board responsibility
Management systems
Supply Chain Labour
Standards Criteria
Policy/Labour codes
Supply chain monitoring
Countering Bribery Criteria
Prohibits giving and
receiving bribes
Obey all relevant laws
Restrict and controls
facilitation payments
Eco-efficiency
Environmental reporting
Environmental policies
and management systems
Product stewardship
Climate strategy
Social Dimension
Corporate citizenship
Labour practice indicators
Human capital
development
Social reporting
Talent attraction &
retention
Economic Dimension
Codes of conduct
Compliance
Corruption & bribery
Risk & crisis management
Other sector-specific
criteria, all of which fall
under one of the three
dimensions
Note: SAMs assessment of corporate
sustainability practices provides the
basis for the Dow Jones Sustainability
Indexes (DJSI)15.
14. Adapted from FTSE4Good, www.ftse.com,

accessed August 2010
15. Sustainable Asset Management, www.
sam-group.com, accessed August 2010
23
Companies should provide

a clear link between ESG
factors and its financial
materiality in annual reports17.
Asset Manager, London
There is increasing evidence

showing how good sustainability
performance positively impacts
a companys bottom line and
enhances brand value. Figure 1.2
depicts SAMs assessment of its
portfolio in which the sustainability
leaders consistently outperform
the sustainability laggards. One
might argue that the costs of
implementing sustainability
activities would adversely impact a
companys financial performance,
but contrary to that, short term
investments, if done well, can lead
to long term gains.
15
Figure 1.2: Sustainability can outperform16
10
5
0
-5
-10
-15
2002
16. SAM and PricewaterhouseCoopers,

The Sustainability Yearbook, 2010
17. WBCSD and UNEP FI, Translating ESG
into Sustainable Business Value, 2010
2003
2004
2005
Portfolio 1 - Sustainability Leaders (Top 20%)

Portfolio 5 - Sustainability Laggards (Bottom 20%)
Corporate measurement,
monitoring and reporting of
environmental issues in Asia
are weak. ESG factors that
have been included in codes
of conduct by multinationals
are reported more widely
(where Asian companies
are linked by MNC supply
chains). There is an
imbalance in requirements for
MNCs and SMEs in Asia17.
Asset Manager, Kuala Lumpur
2006
2007
2008
25
ENABLING
EFFECTIVE
SUSTAINABILITY
IN YOUR
ORGANISATION
Key Takeaways
The alignment
of a companys
with that of its
corporate strategy
ensures a focused
and effective effort
Good sustainability
management
embeds sustainability
elements into existing
business practices
with a focus on value
creation
27
Defining your
Companies with effective sustainability

strategies have one thing in common
their sustainability strategies are
aligned to or incorporated into their
corporate strategies, which assist in
embedding their sustainability activities
into the day-to-day business activities.
A companys sustainability
strategy should be aligned
with its corporate values, and
should define the companys
social and environmental
responsibilities as well
as related future goals
and objectives.
1. Business in the Community, www.

bitc.org.uk, accessed March 2010
2. UN Global Compact & the
International Finance Corporation,
Corporate Governance, The
Foundation for Corporate Citizenship
and Sustainable Business, 2009
It is vital for the company

to articulate clearly in its
sustainability strategy its
plans to address the issues
of most concern to its key
stakeholders. This is based
on the perspective that a
companys success depends on
the strength of its relationship
with its stakeholders1.
A clear and aligned strategy

provides various benefits to
the company, including easier
communication of sustainability
objectives to gain support from
key stakeholders including senior
management and the Board,
and clearer alignment of social
and environmental efforts to
maximise the effort invested.
Figure 2.1 depicts how
responsible business and
sustainable profits are embedded
into the function of the Board.
The Board is also responsible
to ensure integration of values
and stakeholder interests in
corporate strategy2.
A well-governed
company takes a
longer-term view
that integrates
environmental
and social
responsibilities
in analysing
risks, discovering
opportunities and
allocating capital in
the best interests
of shareowners.
There can be no
better way to
restore public
confidence in
both businesses
and markets and
build a prosperous
future2.
Georg Kell
Executive Director,
UN Global Compact
Figure 2.1: Function of the Board2
SHAREOWNERS OR
OTHER STAKEHOLDERS
Reporting to
BOARD
Integration of corporate citizenship
values, shareowner and other
stakeholder interests in corporate
strategy and risk management
MANAGEMENT
Mainstreaming
corporate citizenship
targets within
company action plans
and reporting to Board
on progress
Feedback from
DAY-TO-DAY
OPERATIONS
Implementation of new
policies in supply chain,
marketing, standard
operating procedures, and
other business practices
STAKEHOLDER
ENGAGEMENT,
including
Ombudsman or
Whistleblowers
29
Integrating and
managing sustainability
Leading companies have

embedded sustainability into
ongoing business practices.
ME
NT
Figure 2.2: Key components of a

sustainability management framework3
A.
Corporate
Strategy &
Sustainability
Strategy
EN
ER
B. Sustainability
Initiatives
LD
EH
O
ST
AK
A good Sustainability
Management Framework will
provide a structured approach
to implementing a robust
sustainability management
mechanism in the organisation.
GA
GE
A companys performance
management system should
be aligned to the sustainability
activities of the company.
This will support effective
monitoring and measuring of
the associated impacts of the
sustainability activities. Training
and development programmes
should be implemented to key
internal and selected external
stakeholders (e.g. suppliers)
to enhance sustainability
awareness in the company.
C. Sustainability
Measures
D. Structure, Processes,
People & Infrastructure
E. Non-Financial
Reporting & Assurance
4. Adapted from Bursa Malaysia
CSR Framework, 2007
A. Corporate strategy and

A clearly defined sustainability
strategy will drive the focus of the
organisation and clearly communicate
to stakeholders on its sustainability
position. This helps to align the
companys efforts across subsidiaries
and departments, and increase
buy-in from all levels, including
management and the Board.
Figure 2.3: Commonly used sustainability dimensions4

Community
Environment
Refers to invested or
donated money, time,
products, services, influence,
management knowledge and
other resources that positively
impact deserving local
communities
Activities aimed at conserving

ecosystems and biodiversity
and managing the impact of a
companys operations on the
environment
Selected indicators:
Total greenhouse gas
emissions (CO2-e)
Total energy consumption
Total water consumption
The sustainability initiatives

and measures adopted by the
company must be aligned to the
sustainability strategy. This will
improve coordination across the
organisation and support better
utilisation of resources.
B. Sustainability initiatives
Workplace
Marketplace
Activities aimed at maintaining

high standards of recruitment,
development and retention of
employees
Activities aimed at encouraging

and influencing shareholders,
suppliers, vendors and customers
to act in a sustainable manner
across the value chain to support
companys own sustainability
agenda
Typically, a companys
sustainability initiatives fall into
one of the four dimensions as
highlighted in Bursa Malaysias
CSR Framework in Figure 2.3.
The sustainability portfolio
should ideally reflect the companys
desired sustainability strategy. The
portfolio should be periodically
assessed, and as and when the
strategy changes, should be refined.
Total community
investment (RM)
Number of hours spent on
community initiatives
Number of community
initiatives
Lost time injuries
Percentage of females in
senior management
Average training hours per
employee
Number of supplier audits
Percentage of suppliers
meeting environmental criteria
Customer satisfaction results
31
C. Sustainability measures
Measures should be developed
to track the performance
of sustainability initiatives
implemented by a company
and the effort involved. Once
developed, these measures
should be agreed upon by the
owners and relevant
stakeholders. Progressive
companies are starting to seek to
develop these measures with key
stakeholders upfront.
D. Structure, Processes, People
& Infrastructure
Effective management of
sustainability can be supported
by a dedicated sustainability
function in an organisation or
a well defined virtual team,
comprising representatives across
the organisation. Bursa Malaysia
encourages its PLCs to
clearly define the sustainability
roles and responsibilities within
the company.
A formal sustainability function
works well in companies that view
sustainability as a strategic issue
as it:
Sustainability should be
embedded within a companys
structure, processes, roles of its
people and infrastructure.
provides management with

visibility to all sustainability
efforts in the company
The sustainability roles and

responsibilities of an organisation
should be clearly defined and
institutionalised, including updates
to job descriptions and Key
Performance Indicators (KPIs)
for existing roles impacted.
supports changing behaviours

to embed a sustainability
culture in the company
aids in the change management

process to update or transform
policies and procedures
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.
Ultimately, the Board should be
responsible for the companys
sustainability practices and there
should be a set of KPIs to govern
the Boards actions.
E. Non-financial reporting
& assurance
reporting should be a
transparent and fair reflection
of the sustainability initiatives
undertaken by the company.
This enables the company
to constructively engage
stakeholders and seek to improve
upon its impact and further
enhance its reputation and value.
Most large companies produce
a standalone sustainability report,
and an independent verification
of the companys sustainability
report would increase its credibility
amongst stakeholders. There
are also trends towards more
web-based communication,
recognising that sustainability
reporting may cover more
long-term issues that are not
always constrained to a financial
year. Bursa Malaysia
encourages companies to
progressively increase the level
of disclosure included in their
sustainability reporting.
Corporate Governance
and Sustainability
Stakeholders want greater
transparency across a companys
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 communities in which they operate,
whether locally or abroad; as good
sustainability practices can enhance
and protect the reputation of a
company and its license to operate.
5. Standard Chartered, Sustainability

Governance, assessed July 2010
In Standard Chartered
Bank, the overall
responsibility for the
banks sustainability
and climate change
strategy is guided by
the Sustainability
and Responsibility
Committee which is
a Board appointed
committee chaired
by an Independent
Non-Executive Director5.
33
Enabling sustainability
in your organisation
The following are some of the key

steps a company may consider when
seeking to embed sustainability in
its organisation. These key steps
can be implemented in a company,
regardless of size. The process is a
continuous loop, and does not end at
step 7 or necessarily start at step 1.
focus areas
engagement plan
The steps highlighted are common steps that Boards

can undertake, whether they are just starting their
sustainability journey, or for Boards that are more
advanced. The differentiating factor is in the breadth
and depth covered in each step.
focus areas
2. Establish annual
resource needs
3. Formalise responsibilities
and reporting structure
4. Set evaluation
criteria
The Sustainability team,

Senior Management
and the Board have to
review various inputs and
agree upfront on what
sustainability means for
their business, the key
issues and challenges
they may face, and the
sustainability focus areas to
enhance value creation for
its multiple stakeholders.
The focus areas should be
aligned to the companys
overall strategy and are
supported by clearly
defined goals for each area.
Resources required to
support the sustainability
efforts of an organisation
should be identified
upfront and included in
the companys budgeting
process. Resources include
financial assets, property,
employees, raw materials,
customers and intellectual
property.
A formalised sustainability
structure with clearly
defined persons in-charge,
their associated roles and
responsibilities and job
descriptions with updated
key performance indicators
(KPIs) can be developed.
A formalised sustainability
reporting and governance
structure can help drive
sustainability maturity in the
organisation.
A defined set of
criteria, which may
include process and
impact measures to
assess sustainability
projects along with
targets, can be created
to provide clarity to
the Management or
Board when selecting
sustainability projects
for adoption. Feasibility
studies are conducted
to support decisionmaking on whether to
implement projects.
2. Establish annual
resource needs
3. Formalise
responsibilities & reporting
structure

templates for reporting
4. Set evaluation criteria

to monitor progress

to monitor progress of
sustainability initiatives

templates for sustainability
reporting
engagement plan
To assess the success

or the failure of projects,
metrics or a dashboard
should be defined for
different stakeholders.
It is good practice for
companies to communicate
their sustainability targets
and metrics to relevant
stakeholders to support
achievement of targets.
Develop internal reporting

templates, guidelines,
processes and responsibilities
to ease the compilation and
analysis of data that will
support both internal and
external sustainability reporting.
Assurance/external verification
should also be conducted to
increase credibility of the report.
demonstrates a visible
commitment to sustainability
and a company should clearly
determine the purpose of
stakeholder engagement
when embarking upon this. The
companys key stakeholders
and their main concerns should
be identified, prioritised and
mapped to help identify the
material sustainability issues
for the company. Outcomes of
stakeholder engagement should
be reviewed and reported.
35
Sustainability
governance
A companys Board of Directors
play an important role in
developing a roadmap for
Sustainability Governance. Good
planning of implementation
procedures and proper
governance mechanisms can help
a Board successfully integrate
sustainability into its mandate.
Below is a roadmap6 developed
for Boards that are starting out
and Boards that are ready to take
it to the next level.
Stage 1
For Boards just
starting out
1. Build sustainability into the firms mission and values.
Establish sustainability mission, vision, values, principles,
and policies in consideration or stakeholder priorities and
international standards.
2. Communicate Boards commitment.

Communicate the Boards sustainability commitment
internally and to stakeholders.
3. Build sustainability into risk management.

Include social and environmental considerations in risk and
opportunity identification, management and monitoring.
4. Integrate sustainability into business strategy
and provide oversight.
Integrate sustainability into business strategy and corporate
plans; set goals, objectives, and targets, and monitor
performance against targets.
6. Adapted from the Conference

Board of Canada: The Role of the
Board of Directors in Corporate
Social Responsibility (report, June
2008); Strandberg Consulting
5. Mandate a committee with sustainability responsibility.

Include a sustainability mandate within a pre-existing
committee, or establish a new committee with a clear
mandate. (See box Proposed Sustainability Committee
Mandate.)
6. Report to stakeholders on sustainability performance.
Review and approve third-party audited sustainability report
for distribution to shareholders and stakeholders;
ensure sustainability report complies with international
sustainability reporting standards.
Stage 2
For Boards ready to take
sustainability to next level
Proposed Sustainability Committee Mandate

Policies
Review and recommend
sustainability policies
(including codes of conduct)
and management systems;
monitor compliance with
policies, commitments, and
regulations.
Stakeholder
Engagement
Review and monitor
stakeholder relations,
consider opportunities
for direct stakeholder
input into committee
deliberations.
Strategy
Review/recommend
sustainability
strategies and plans; provide
guidance to management
on objectives and targets;
provide oversight and
guidance on sustainability
performance/progress.
Sustainability Report
Determine overall scope
of, provide input on,
and recommend Board
adoption of Board
sustainability report.
Trends
Monitor and provide
recommendations on public
policy, consumer, stakeholder,
corporate, and general
public trends, issues, and
developments that could
impact the company.
Risk Management
Monitor and oversee
sustainability risk
management plans;
review effectiveness of
issue identification and
management.
Incident Management
Review incidents and
remedial actions and
monitor crisis readiness
and emergency plans.
Sustainability
Assessment
Review and make
recommendations on
sustainability impacts
of major business
decisions.
7. Reward executives for

sustainability performance.
Incorporate non-financial/long term
objectives into executive compensation;
ensure performance management systems
reward sustainability performance.
8. Recruit directors with
sustainability perspectives.
Explicitly include sustainability in director recruitment,
e.g. director diversity and experience and
background in sustainability issues/management.
9. Orient and train directors on sustainability.
Include sustainability in director orientation,
ongoing training and education, and Board
evaluations; ensure Board is provided with adequate
sustainability expertise and information to make
informed decisions.
10. Provide mechanisms for stakeholder input.
Ensure mechanisms are developed for Board
consideration of unfiltered input from stakeholders.
11. Recruit CEOs with sustainability competency.
When recruiting a new CEO, ensure
candidates are assessed for sustainability
awareness and competency.
12. Consider sustainability in major
business decisions.
Include consideration of sustainability in
major acquisitions, business partnerships, mergers
and investments.
37
Questions for
management
Role of
the Board
What is our sustainability

strategy and focus areas?
Have we aligned our desired
sustainability strategy to our
corporate strategy?
How are we managing
sustainability within the
organisation? Do we have a
dedicated team to help drive
our sustainability agenda?
Who is in the Sustainability
Committee?
What steps are we taking to
understand how to optimise
our economic, social and
environmental outcomes?
What are the key environment
and social aspects of the
organisations business,
products and processes?
Are the key focus areas
meeting key stakeholders
expectations and demands?
Discuss and approve the

companys sustainability strategy
View sustainability as part of
the Boards duty of providing
oversight and managing strategic,
social, ethical and environmental
risks for better decision-making
Develop Sustainability Terms of
Reference for the Board
Delegate responsibility for social
and environmental oversight
to Board committees/ specific
director where appropriate
Include sustainability as part of
the Board agenda with the Board
making decisions about the
companys sustainability position
and direction
Approve budget for sustainability
initiatives and commitments
Set KPIs on sustainability for the
Board and Senior Management
39
PRIORITISING
YOUR
SUSTAINABILITY
FOCUS AREAS
Key Takeaways
Different businesses
will have different
and sustainability
focus areas that
stakeholders will
expect active
management of
Identification of
issues is done
through various
methods, e.g.
stakeholder mapping
and engagement,
value chain analysis
and benchmarking
41
Common focus areas
1. PricewaterhouseCoopers Sept 2010, adapted

with permission from John Zinkin, 2007
Figure 3.1: Common sustainability issues

impacting companies and industries1
Community
Raw materials
processing
Social inequity
Abuse of natives
Transport & logistics
Social inequity
Production
Value chain
focus is dependent on
the business impact of
their operations on the
Community, Environment,
Marketplace and the
Workplace as well as
stakeholders expectations
and corporate strategy.
Assessing sustainability
issues along the companys
value chain is a useful
approach to avoid missing
identification of key
sustainability issues in
determining sustainability
focus areas. The following
are common sustainability
issues that are relevant
across any sector:
Distribution
Social inequity
Destroying local capability
via access to better products/
processes
Community healthy & safety
Marketing and sales
Social inequity
Social inclusion
Management policies
Support education
Environment
Marketplace
Workplace
Depletion
Environmental damage
Use of energy
Corruption
Child labour
Human rights
Discrimination
Union rights
Health & safety
Working hours
Pollution/Spills
Emissions
Use of energy
Corruption
Human rights
Pollutions/Spills
Emissions
Use of energy
Use of water
Use of raw materials
Use of packaging
Waste management
Corruption
Child labour
Human rights
Pollution/Spills
Emissions
Use of energy
Corruption
Human rights
Green marketing
Sustainable packaging
Corruption
Truthful selling
Ethical marketing
No logo attack
Consumer awareness
Fairtrade
Discrimination
Union rights
Health & safety
Working hours
Energy & efficiency

Climate change strategy
3 Rs (Reduce, Reuse & Recycle)
Environment management/policy
Operational eco-efficiency
No corruption
Obey the law
Avoid politics
Customer relationship management
Brand management
Innovation management
Avoid facilitation payments
Responsible government lobbying
Diversity & inclusion

Meritocracy
Respect union rights
Good health & safety
Good working hours
Pay for performance
Health & awareness programmes
Talent attraction, retention &
development
Discrimination
Union rights
Health & safety
Working hours
43
Key sustainability
focus areas
The Sustainability Yearbook2 published annually by Sustainable Asset
Management (SAM) and PwC lists the sustainability leaders by different industry
sectors and highlights sector specific focus areas. More details can be found
on Bursa Malaysia Sustainability Knowledge Portal. Some examples are
highlighted below:
Industrial Products
Safety, clean internal combustion,
energy efficiency and proper
disposal options for retired
products are key issues for this
sector. Improving the efficiency
and having the ability to prepare
for present and future carbon
constraints are essential
considerations when developing
products. Occupational health and
safety, human rights and equality
are also other challenges present
in the industry especially as the
workforce tends to be culturally
diverse. Exposure to human
rights and abuse issues are
key considerations as suppliers
penetrate emerging markets.
2. SAM and PricewaterhouseCoopers,

The Sustainability Yearbook 2010,
2010
Trading/Services
Some key issues across this
sector are energy efficiency,
greenhouse gas (GHG) emissions,
the availability of clean water and
waste management. Threats to
biodiversity and the management
of ecosystems need to be
addressed. Equal employment
opportunities and the eradication
of gender bias are other issues
faced by companies in this sector.
Properties
Energy efficiency and climate
change are major concerns for
the property sector. Increasing
energy costs have made the
amount of operational energy
used in buildings a distinctive
factor for their attractiveness.
Limited land availability, threats
to biodiversity and the supply
and usage of sustainable materials
are other key concerns.
Consumer Products
Climate change issues are of
primary importance. They affect
the supply chain and the source
of many consumer products.
Ethically sourced products have
also gained importance amongst
various stakeholders although
supply costs may increase. It is
essential for consumer product
groups to constantly engage and
maintain stable relationships with
their suppliers in the long term in
order to ensure that transparent
reporting exists throughout the
supply chain process.
Construction
The difficulty in establishing
proper controls over energy
usage, responsible use and
management of resources and
organisational health and safety
issues have always been key
areas of concern. Water scarcity
and energy consumption are
key in establishing the resourceconscious status of construction
services providers. Proper codes
of conduct established and
implemented in a company can
prevent involvement in anti-trust
and bribery cases.
Plantation
Primary challenges include
ensuring responsible management
of forests and plantations and
responsible sourcing. Other issues
include minimising environmental
impact of operations, complying
with labour legislation, talent
attraction and retention,
occupational health and safety
as well as identifying suppliers
with similar sustainability
values. Threats to indigenous
communities, chain-of custody
issues, GHG emissions and
management of ecosystems are
issues that are gathering focus.
Finance
Accountability and transparency
have become increasingly
important in building
competitive advantage
in the finance industry.
Established compliance and
risk management standards
have become vital. In addition,
climate change, changes in
an economys demography
and disintermediation of value
chains will continue to impact
the economic environment.
Talent retention will persist as
an issue for the industry.
Technology
Key issues include
conservation of energy
and resources, reusing and
recycling programmes, waste
management and proper waste
disposal. Security over the use
of information technology and
confidential data is also an
issue in relation to client privacy.
Other sustainability issues
include the use of hazardous
materials and maintaining fair
working conditions.
Hotels
Most hotel groups have
acknowledged that climate change,
employment practices, community
welfare, waste management and
sustainable buildings are main
issues. Integration into local
cultures, the sustainability of
franchisees, the climate change
impacts of tourist travel and sex
tourism are rarely considered.
Mining
The major challenges for the
industry include managing the
environmental and regulatory
requirements, improving mining
safety and increasing operating
costs due to the shortage of
skilled workers. Management and
reduction of GHG emissions as
well as occupational health and
safety remain major issues. Mine
closure planning has recently gained
momentum and requires structured
stakeholder engagement activities
as well as sophisticated modelling.
45
Questions for
management
Role of
the Board
What are our main concerns

in the community,environment,
marketplace and workplace
dimensions?
What are the relevant
sustainability issues to our
business and how do we
identify them?
What relevant key issues are
we failing to address?
Review and sign-off on materiality

of sustainability issues
Oversee management of material
sustainability issues through
robust processes and controls
Seek regular updates and
measures on management of
material sustainability issues
47
ENGAGING
STAKEHOLDERS
Key Takeaways
Stakeholder
engagement benefits
an organisation
by enhancing its
accountability
and transparency,
strengthening its
strategic direction and
supporting proactive
risk management
Stakeholder
engagement is a
continuous process
utilising various
methods to achieve a
desired outcome for
organisations whilst
balancing the needs
49
of its key stakeholders
Effective stakeholder
engagement
The increasing trend in non-financial

reporting highlights how organisations are
expected to meet stakeholders expectations
across economic, environmental and social
dimensions. There is a shift towards a
more integrated approach in reporting a
companys performance to a cross-section of
stakeholders rather than mainly shareholders.
It is no longer enough for

companies to focus on managing
only their shareholders; they
also need to engage other
stakeholders. Managing key
stakeholders such as regulators,
customers, suppliers, business
partners, employees and
communities are becoming
increasingly important.
Stakeholders can have a
significant impact on a companys
market value especially its
intangible value. Instances of
product boycotts, employee
strikes and anti-product
campaigns can cause the market
value to fall if there is a large
intangible value attached to it.
1. Edelman, 2010 Edelman

Trust Barometer, 2010
A robust stakeholder engagement

approach helps a company to
communicate openly which
makes it easier to build trust
between a company and
its stakeholders. Ultimately,

organisations require strong
stakeholder engagement for
continued support of their
license to operate.
Today, leading companies have
developed an appreciation that
effective stakeholder engagement
can contribute to learning
and innovation in products
and processes.
In its 2010 Trust Barometer
survey findings, Edelman reported
that more than half of its 4,875
respondents concluded that all
stakeholders are equally important
and should be considered when
a CEO makes a key business
decision. Only 14% opined that
shareholders of the company were
the most important, with the rest
indicating all other stakeholders
had an equal, if not more important
say than the shareholders1.
Figure 4.1: Benefits of stakeholder engagement
Accountability and
transparency
Account to stakeholders for
the organisations actions
Identify relevant social and
environmental issues to
report against
Assuring the companys
stated performance against
Risk management
Better relationships within the
community and country
Understand societal
sustainability concerns
which may adversely impact
operations
Identify emerging issues
that may influence market
conditions
Manage potential brand risks
and associated costs
Strategic direction
Understand impact of
operations on stakeholders &
influence stakeholders wield
Prioritise sustainability
issues based on materiality
Innovate and generate
new business
Establish credibility as a
partner in solutions
Get external feedback and
advice from stakeholders
51
Information needs
of stakeholders
Stakeholders are defined by

AccountAbility as a group or individuals
who can affect, or who can be affected
by a corporation or its activities2.
The map of relevant stakeholders

can be different for separate
issues. New stakeholders
can emerge on the scene
unexpectedly with the emergence
of new issues.
The World Business Council
for Sustainable Development
highlights two categories of
stakeholders3:
2. AccountAbility, AA1000
Stakeholder Engagement
Standard, 2005
3. World Business Council for
Sustainable Development, Striking
the Balance, 2002
Direct stakeholders include

shareholders and employees,
often considered to be an
organisations most important
asset
Indirect stakeholders
include all the individuals
and organisations within
the companys sphere of
influence, such as customers,
suppliers, NGOs, capital
markets, financial analysts,
government agencies and local
communities
Stakeholders have varying

information needs and means
of interaction depending on
their role and focus area.
An organisation will need
to decide who is its primary
target audience as it would
be impractical to spend
equal effort addressing
each stakeholder group.
Various stakeholders read
sustainability reports to satisfy
their particular information
needs. The following is a
summary to illustrate the
information needs of common
stakeholders:
Stakeholder
Information Needs
Employees
Social, economic and environmental performance of the company

The benefits and impact of sustainability initiatives implemented by the company
Environmental performance of the company
Employee engagement results
Customers
Social and environmental impact of the products and services

Corporate values and practices
Pricing
Raw materials and packaging materials used
Supply chain performance
Quality of products and services
Suppliers
Financial health and supply chain practices

Human rights
Environment
Product impact
Business operations
Working conditions
Ethics, accountability and disclosure
Government
Regulatory purposes and control

Formulation of policies
Values and governance
Compliance
Fair play
Social and environmental impact
Capital markets,
Financial analysts,
Shareholders
Information to support longer-term investment

Ethical indices performance
Sustainability performance
NGOs
Companys position on social and environmental responsibilities such as

environmental protection, human rights, corruption
Community at large
Impact of operations to the community and the environment

Human rights
Social impact
Employment and business opportunity
53
Identifying and
engaging stakeholders
Engage
Identify
Identification of key direct
and indirect stakeholders
is largely influenced by
the role of stakeholders
and the impact that they
have on the organisation
and the nature of
the relationship. The
various dimensions for
organisations are4:
By responsibility
Existing or future legal, financial
and operational obligations as
stipulated in regulations, contracts,
policies or codes of practice
By influence
Individuals or groups that at present
or in the future can influence an
organisations ability to meet its
objectives or hamper its actions.
These can include those with
informal influence and those with
formal decision making power
By proximity
Individuals or groups involved
in daily operations or live within
the vicinity of an organisations
operations
By dependency
Individuals or groups that are most
dependent on your organisation
such as employees for their
livelihood, customers for their
products, suppliers for their raw
materials
4. Stakeholder
Research Associates
Canada, UNEP and
AccountAbility, The
Manual, 2005
and adaptation
from Stakeholder
Research Associates
Canada, UNEP and
AccountAbility, The
Manual, 2005
By representation
Individuals or groups either through
formal representation or traditional
structure of a society entrusted
to act as representatives, e.g.
members of parliament, heads of
a local community, trade union
representatives, councillors,
representatives of membership
based organisations
Select and utilise the right

engagement approach for each
stakeholder group.
The approaches to stakeholder
engagement include relationships
built around one-way
communication, consultation,
dialogue and partnerships
as highlighted in Figure 4.2.
Organisations need to understand
the risks and opportunities of
each engagement approach
and ultimately, decide on an
approach that will meet both
the organisations objective and
stakeholder needs.
Companies embarking on
stakeholder engagement should
be prepared to address conflicting
views and issues raised by the
different stakeholders. Both
directors and management should
discuss possible resolutions for
pertinent issues raised. As good
practice, companies should
ensure that feedback is given
to stakeholders to promote
transparency and encourage
dialogue once stakeholder
engagement is embarked upon.
Bursa Malaysia encourages
continuous communication
and engagement with relevant
stakeholders to ensure that
sustainability is effectively
embedded within the organisation.
Figure 4.2 Stakeholder engagement methods5
Inclusivity of relationship
Trust us
Involve us,
Hear us
Communications
Consultations
Dialogue
Partnerships
Any manner of
information-sharing
with stakeholders,
generally through
one-way, noniterative processes.
The process of
gathering information
or advice from
stakeholders and
taking those views
into consideration to
amend plans, make
decisions or set
directions.
An exchange of
views and opinion
to explore different
perspectives, needs
and alternatives,
with a view to
fostering mutual
understanding, trust
and cooperation
on a strategy or
initiative.
In the context
of sustainability
interactions,
partnership has
been defined
as people and
organisations from
some combination of
public, business and
civil constituencies
who engage in
common societal
aims through
combining their
resources and
competencies
sharing both risks
and benefits.
Method
Tools
Strategy
Show us
Company
brochures & reports
Roadshows
Websites
Press releases,
press conference,
advertising
Monitor
Questionnaire
surveys
Focus groups
Ad hoc stakeholder
engagement
Advisory forums
Online feedback/
forums
Multi-stakeholder
forums
Advisory panels
Online forums on
intranet/internet
Monitor, Empower,
Engage
Empower, Engage
Joint ventures
Alliances
Local/regional
/global multi
stakeholder
initiatives
International
organisation
associated forums
Partner
55
Questions for
management
Role of
the Board
Who are the priority

stakeholders of my
organisation?
Do we have a robust
stakeholder engagement plan?
Do we know the key
sustainability issues relevant
to our key stakeholders?
How have we engaged our key
stakeholders? Has it proven
effective to us and them? Do
we need to explore alternative
methods?
Do we report our stakeholder
engagement?
Are we engaging for the sake
of public relations purposes
or are we genuinely interested
in seeking out stakeholders
perspectives?
Do we use feedback from
stakeholders effectively in our
decision making process?
Do we revert to stakeholders
on issues raised? Is there
a two-way communication
process with our
stakeholders?
Ensure alignment on purpose

of stakeholder engagement
and readiness to manage
risks and issues raised
Lead specific stakeholder
engagements to gather
feedback and ideas.
Boards can have innovative
conversations that can help
expand their views
Monitor output of stakeholder
engagements and make
decisions to improve the
companys sustainability
position and direction
Ensure management
considers investor and
other stakeholder needs to
balance between shareholder
value and non-financial
performance
57
MEASURING
AND
REPORTING
Key Takeaways
Setting relevant KPIs for
sustainability initiatives is
critical for understanding
how well a companys
is performing and the
impact of these initiatives
The data reported in
a sustainability report
should cover areas
that have significant
economic, environmental
and social impacts to
the company and its
key stakeholders across
the four sustainability
dimensions of workplace,
marketplace, community
and environment
59
Measuring your
sustainability impact
Sustainability is a part of
good business practice for
long-term shareholder value.
Companies that measure

and report their sustainability
performance understand how to
improve their processes, reduce
their costs, comply with regulatory
requirements, manage stakeholder
expectations and take advantage
of new market opportunities.
Measures define the outcome
of an initiative or programme
undertaken by a company.
Clear definition and monitoring of
measures support:
management's decision to
review and revise sustainability
strategy and focus
better stakeholder engagement
and management
better understanding of the
impact and benefits of the
sustainability programme
prioritisation of higher impact
initiatives
As good practice, companies

should set baseline and target
measures to monitor the
progress and effectiveness of the
initiative and its impact (sample
measures are highlighted in
Figure 2.3). Targets set should be
achievable and realistic.
In order to track progress, it is
good practice to have milestones
in place in order to identify and
anticipate problems.
Year-on-year comparisons
demonstrate the improvements
and challenges faced, and
provide management with
quantitative data to support
their efforts, complementing
qualitative statements.
Overview of sustainability
reporting process
Companies are increasingly reporting their sustainability

performance using different means, either in their annual reports,
websites or standalone sustainability report. Good sustainability
reports commonly have a clear, holistic, transparent and independent
account of the companies activities in the sustainability sphere.
A robust reporting process will ensure data reported is easily verifiable
and assured by independent parties and sustainability stakeholders.
Figure 5.1: Sustainability reporting process
Define parameters,
identify and
collate data
Assess, prioritise
and address
sustainability gaps
Identify gaps
Clearly define the
between compiled
parameters to be covered,
data and the defined
such as the rationale for the
parameters
companys reporting, the
Prioritise gaps
scope of coverage,
identified
including reporting
Agree how and when
framework to adopt,
to address gaps
level of assurance and
agreed focus areas
Define reporting boundaries
and materiality
Identify key functions
and roles relevant for
sustainability information
Develop well-defined
reporting templates to
collate and manage data,
if existing mechanism not
already in place
Report
sustainability
performance
Obtain approval from
Board of Directors
before finalisation of
report
Publish performance
against commitments
and targets. Share
future targets
Explain any gaps in
data/shortfall against
targets and rectification
measures
Consider obtaining
independent assurance
on report
61
Sustainability frameworks and good practices require companies to provide

a comprehensive and holistic view of their sustainability performance through
adopting a quality reporting framework. Some of the key considerations of
quality sustainability reporting for companies are listed here. Further details can
be obtained at Bursa Malaysias Sustainability Knowledge Portal.
Figure 5.2: Key considerations of quality sustainability reporting
Reporting principles
Content guidelines
Methodology
Adopt balanced
frameworks that provide
positive and negative
aspects of activities
undertaken
Frameworks should
provide clarity and
provide an accurate
status update of the
initiatives undertaken
Stakeholders should
be able to analyse the
changes and perform
comparison checks in a
timely manner
Information should be
verified and examined to
ensure that it is reliable
and accurate
Include sustainability
vision, company structure,
governance and policies
Clearly define materiality
of sustainability issues
and highlight relevance of
sustainability initiatives to
stakeholders and company
Share performance
measures, including past
and current performance
indicators
Consider obtaining
verification and assurance
reports by a stakeholder
panel or credible external
third party assurance
provider
Highlight future
commitments
Address any gaps,
shortfalls in targets and
issues highlighted via the
assurance process
Define content and

boundaries to determine
the reporting scope
and depth. Disclose
boundary of report
Identify key
sustainability areas and
measures to ascertain
the areas or significant
themes to stakeholders
Prioritise key areas
and measures by
assessing key risks
and opportunities
to determine areas
and measures
deemed important
to stakeholders and
businesses
Report key areas and
measures based on
principles and guidelines
Bursa Malaysia's Listing

Requirement (Appendix 9c,
Part A (29)) states that
companies must include in their
annual report a description of
the corporate social responsibility
activities or practices undertaken
by the listed issuer and its
subsidiaries or if there are none,
a statement to that effect".
It is not necessary for companies
to report everything, but a good
sustainability report should
provide a balanced representation
of the companys sustainability
initiatives and progress status.
Typically, quality sustainability
reports demonstrate the following
within well-defined boundaries
and for the material areas:
Accuracy
A good sustainability report should
provide adequate information
that is accurate with a significant
amount of detail regarding
the companys progress on
sustainability performance
Transparency
Companies should provide a
balanced view of the actual
performance status of the
companys sustainability initiatives
Completeness
A good sustainability report
should be concise with a detailed
overview of the economic,
environmental and social impacts
to provide stakeholders an
accurate assessment of the
companys performance
Companies choosing to
report on their sustainability
performance are encouraged
to adopt global frameworks to
guide them.
Global Reporting Initiative (GRI)
is a widely used sustainability
reporting framework and is
committed to continuous
improvement and application
worldwide. This framework
sets out the principles and
indicators that organisations can
use to report their economic,
environmental, and social
performance.
Other commonly used
guidelines include:
London Benchmarking
Group (LBG) for community
investment
Greenhouse Gas (GHG)
Protocol for environmental
reporting
Roundtable on Sustainable
Palm Oil (RSPO) for palm-oil
specific reporting
Companies should adopt
the framework(s) that best suit
their business.
Reporting boundaries
The reporting boundary
for the sustainability report
needs to be defined. This
is especially pertinent for
larger companies that
have many subsidiaries,
associate companies or
joint ventures.
The reporting boundary
needs to be considered
from both the perspectives
of management and
stakeholders. At a
minimum, the reporting
boundary should cover
entities which the
organisation exercises
control or significant
influence over, to
ensure an accurate
representation in its report.
The approach chosen to
define boundaries should
be clearly disclosed
in the report to avoid
misunderstanding.
63
Assurance for credibility
Assurance of reports can help verify authenticity of

a companys sustainability performance and can
be carried out internally or externally. Companies
seeking assurance should have an independent party
to conduct such assurance to ensure credibility. The
writer of the sustainability report must be independent
of the assurance provider.
Internal
Assurance
External
Assurance
information can be verified
internally by a group of
individuals or a committee
(e.g. internal audit) which
is independent of the
division tasked with
compiling the sustainability
activities for verification.
As a companys economic,
social and environmental
performance attract
increasing attention from a
wide range of stakeholders,
credible sustainability
reporting has become
increasingly important as a
source of information.
Questions for
management
Role of
the Board
Do we have performance
measures and KPIs that
are meaningful for our
sustainability initiatives?
How can we further enhance
the companys value by being
more sustainable?
Do we compare our
sustainability targets and
achievements against industry
leaders?
Are we reporting data that is
material to ensure the right
focus of the report?
What is the boundary of our
sustainability report and what
rationale is used to define it?
What degree of comfort
do we need to provide our
stakeholders and readers for
our sustainability report?
Should we consider obtaining
external assurance on the
report?
How have we maximised
the distribution of reports to
promote our company?
Have we effectively
communicated our reports to
our relevant stakeholders?
Review performance of
key sustainability initiatives
(including external
comparisons) and recommend
improvements
Cascade understanding that
sustainability brings long-term
value to the company
Encourage transparent
reporting and assurance to
increase credibility
Discuss results of assurance
with assurance providers and
management and oversee the
required key improvements
Assess relevance of report
in attracting institutional
investors and socially
responsible investors
65
GLOSSARY
Abbreviation
Full term/definition
CSR
Corporate Social Responsibility
CR
Corporate Responsibility
DJSI
Dow Jones Sustainability Indexes
ESG
Environmental, Social and Governance
FCFF
Free Cash Flow to the Firm
FTSE
Financial Times and Stock Exchange
Gen Y
Those born after 1980
GHG
Greenhouse gases
KPIs
Key Performance Indicators
MNC
Multinational Companies
PLCs
Public Listed Companies
PwC
PricewaterhouseCoopers
ROIC
Return on invested capital
SAM
Sustainable Asset Management
SME
Small Medium Enterprises
Stakeholders
A group of individuals who can affect, or who can be affected by a

corporation or its activities
Sustainability
Development that meets the needs of the present generation without

compromising the ability of future generations to meet their own needs
(as defined by the Brundtland Commission)
SRI
Socially Responsible Investments
Triple bottom line
Takes into account social, economic and environmental aspects
WACC
Weighted average cost of capital
67
DISCLAIMER
Although care has been taken in the production of this Guide, there is no warranty expressed or implied as to the accuracy or
completeness of the material herein. In no event shall Bursa Malaysia be liable for any claim, howsoever arising, out of or in
relation to this Guide. Bursa Malaysia shall under no circumstances be liable for any type of damages (including but not limited
to, direct, indirect, special, consequential, incidental, or punitive damages whatsoever or any lost profits or lost opportunity). All
applicable laws, regulations and current Bursa Malaysia Berhad rules should be referred to in conjunction with this Guide.
BURSA MALAYSIA BERHAD

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POWERING

2 / POWERING BUSINESS SUSTAINABILITY

Sustainability is not a fad

Sustainability is not a fad but

TUN MOHAMED DZAIDDIN

About this Guide

Measuring and Reporting

We would especially like to thank

6 / POWERING BUSINESS SUSTAINABILITY

ABOUT THIS GUIDE

This Guide has

The primary objectives of the Guide are to:

8 / POWERING BUSINESS SUSTAINABILITY

The Guide is structured into five chapters with each

Highlights the relevance of

Summarises the common

Introduces measuring and

Further guidance can

2. PricewaterhouseCoopers Sept 2010, adapted

Identify resources that

4. Set evaluation criteria

Define and agree on

5. Use relevant measures

6. Develop guidelines and

Develop internal reporting

Define role of stakeholders

Raw materials processing

Transport & logistics

A companys sustainability focus

Marketing and sales

Energy & efficiency

Diversity & inclusion

Accountability and transparency

Enabling Effective Sustainability

View sustainability as part of the

Develop Sustainability Terms of

Companies that measure, manage

Review and sign-off on material sustainability

Discuss results of assurance

Ensure management considers investor

Clearly define the parameters to be

Identify gaps between

Obtain approval from

Cascade understanding that

Lead specific stakeholder engagements to

Approve budget for sustainability

Assess, prioritise and

Monitor output of stakeholder engagements

Define parameters, identify

Ensure alignment on purpose of stakeholder

Include sustainability as part of the

Set KPIs on sustainability for the

Assess relevance of report

12 / POWERING BUSINESS SUSTAINABILITY

In 1987, the United Nations World Commission on

1. World Commission on Environment and Development, Our Common Future, 1987

14 / POWERING BUSINESS SUSTAINABILITY

Business opinion polls and corporate

The case for

6. PricewaterhouseCoopers, 13th Annual

16 / POWERING BUSINESS SUSTAINABILITY

of CEOs are sensing a shift in consumers

Figure 1.1: Sustainability in a

Figure 1.1 shows how