Globally there is an increasing focus on environment, social and governance (ESG) factors, driven by investor engagement, regulation and societal expectations. Awareness of ESG is also on the rise in Malaysia. For example, Bank Negara Malaysia recently published the Climate Change and Principle-based Taxonomy, demonstrating their commitment to addressing climate risk and supporting the transition to net-zero, and work is being done to define a "green taxonomy" to offer more clarity around what is considered sustainable.
These trends impact companies, where disclosures are expected to extend beyond traditional financial reporting to include ESG factors and climate-related risks, as well as investment managers who must build sustainability in to their strategies. But what exactly do investment managers need to do in order to integrate ESG into their investment management processes?