FTSE frees up ESG ratings for Malaysian firms as rise of public scores continues

The partnership is at least the third scheme of its kind within developing markets

Data provider FTSE Russell has made its ESG ratings of major listed Malaysian companies publicly available, after entering into an agreement with the country’s stock exchange, Bursa Malaysia.

The availability of ESG ratings is intended to aid investors seeking sustainable investment opportunities, and to allow listed companies to benchmark their ESG performance against peers, said Bursa.

The first batch of ratings, covering more than 220 Malaysian companies, is now available on the Bursa website. Under the agreement’s terms, FTSE will provide ESG ratings for the constituents of the benchmark FTSE Bursa EMAS Index, which represents 98% of the market capitalisation of the Main Market of Bursa Malaysia.

Bursa will also publish a semi-annual newsletter “to provide further transparency and information on new developments in the ESG landscape to the public”. The first edition can be found here.

Malaysian companies evaluated by FTSE will be ranked relative to their peers on ESG performance based on a review carried out in June. However, only the topline ratings will be accessible, not the underlying data and information from which the ratings are derived. 

Datuk Muhamad Umar Swift, CEO of Bursa Malaysia, said: “As a frontline regulator and market operator, we want to provide an environment that encourages sustainable practices among our market participants”. 

This is at least the third scheme of its kind within emerging markets. Previously, FTSE Russell, Sustainalytics and ISS ESG had partnered with the Taiwanese exchanges to create the world’s first “consolidated ESG ratings dashboard available for all market participants”, as it was billed at the time. Vigeo Eiris entered into a similar agreement with the Stock Exchange of Thailand in July.

The latest collaboration between the FTSE and Bursa is part of a longstanding relationship which has seen the UK-based provider calculate a broad suite of market indices for the Malaysian market since 2006. As of 2014, this included the FTSE4Good index, which recognises Malaysian companies with market-leading corporate responsibility performance.

A number of the sustainability-focused index’s constituents have been implicated in human rights violations, with some facing repeat allegations stretching back years. This includes PPE manufacturers Top Glove and Hartalega, and agri producer Sime Darby, which have each been dogged by reports of forced labour and poor working conditions.

In June, the number of FTSE4Good Bursa Malaysia constituents increased three-fold from 24 to 73.

Analysis published by RI today discusses how coal giant Adani Power made it into the FTSE4Good.