Bursa ESG index additions suggest improved practices for Malaysian companies: CGS-CIMB
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Vivienne Tay
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THE net addition of 8 new companies into the FTSE4Good Bursa Malaysia (F4GBM) Index suggests that Malaysian companies are showing improved ESG (environmental, social and governance) practices.
This is despite enhanced ground rules, including minimum climate scores for being included in the index, CGS-CIMB said in a research report dated Jun 10.
The F4GBM index, launched in December 2014 with 24 constituents, measures the ESG performance of public-listed companies in the FTSE Bursa Malaysia EMAS Index, which in turn comprises constituents of the FTSE Bursa Malaysia Top 100 Index and FTSE Bursa Malaysia Small Cap Index.
CGS-CIMB is positive on 10 new additions and 2 deletions from the F4GBM as the latest changes raise the number of constituents in the index to 87 – a new record high. The research team’s top picks are RHB, resort operator Genting Malaysia and home improvement retailer MR.DIY.
In the latest F4GBM semi-annual review, 3 large-cap companies – Dialog, Malaysia Pacific Industries (MPI) and Press Metal Aluminium Holdings – were included in the F4GBM as they meet the criteria of having an overall ESG rating of 2.9 or higher.
They also do not have a score of zero in any applicable “high exposure theme” and met the minimum climate change score threshold of 3 for primary impact subsectors and 1 for secondary impact subsectors.
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The remaining additions are George Kent, Greatech, Innature, Paramount, Scicom, Scientex and SP Setia. Magnum and MNRB Holdings were deleted from the index due to their exclusion from the FBM EMAS index.
No companies were deleted due to non-compliance with the enhanced ground rules, CGS-CIMB noted.
Separately, nearly all 10 additions, except for Scicom, were added to the FTSE4Good Bursa Malaysia Shariah (F4GBMS) Index for being Shariah-compliant, according to the Securities Commission’s Shariah Advisory Council screening methodology.
All constituent changes will take effect on Jun 20.
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