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ESG in Focus: The Malaysian Evidence

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 City University Research Journal
Volume 09 Number 01 January 2019 PP 72-84

ESG IN FOCUS: THE MALAYSIAN EVIDENCE

1 2 3
Muhammad Zahid Haseeb Ur Rehman and Muhammad Anees Khan

ABSTRACT
The aims of the current study were to investigate the regulatory factors recommended by the
Malaysian Code on Corporate Governance (MCCG) 2012 for the improvement of environmental,
social, and governance (ESG) practices. The study employed ESG index based on GRI framework for
data collection from 878 Malaysian public listed companies for three years from 2011 to 2013. The
results showed that there is a significant slight improvement in the level of ESG practices in Malaysian
public listed companies over time. In addition, the study revealed that MCCG 2012 and its
recommendation for increasing the quota of women directors on the board and top management
commitment have a significant role in improving the level of ESG practices in Malaysian public listed
companies. The overall results suggested that regulatory reforms matter for implementing ESG
practices. The findings of the study have important insight for the regulatory bodies of Malaysia in
order to improve the level of ESG practices in the corporate sector and step ahead towards
sustainable industrialization.

Keywords: ESG Practices, MCCG 2012, Diversity, Management Commitment, Malaysia

INTRODUCTION
The gigantic corporate failures and corporate governance scandals have questioned the
accountability, ethical behaviour and the ability of business firms to manage a broad spectrum of
stakeholders strategically. These deviations have also shaken the investors' confidence around the
world. As, particularly, these corporate failures badly affected the investors and shareholders
confidence and also make a negative chaos on stock exchange indexes around the world .
Consequently, it has gained much attention among the business firms, its management and regulatory
bodies to sustain the stakeholders and investors' confidence. A case in point the Bursa Malaysia (a
Malaysian stock exchange) was also dropped by 45 percent in 2008. Henceforth, the government of
Malaysia announced the Malaysian code on corporate governance (MCCG) 2012 with some potential
changes of MCCG 2007 for the improvement of economic sustainability and governance structure of
Malaysian public listed companies. The code also emphasized the need for transparency in financial
and non-financial disclosures for the shareholders and other potential investors. Predominantly, in
non-financial reporting, the MCCG 2012 focused on environmental, social and governance (ESG)
reporting and improving its related corporate strategies. Importantly, it had aimed to give attention
that how Malaysian public listed companies address their responsibilities to shareholders and
stakeholders.
This notion leads towards the growth and incorporation of ESG practices. Hence, as central point and
motivation of the current study, we focus on those areas addressed in MCCG 2012 related to ESG
practices and reporting. Firstly, the code discussed to improve the level of ESG practices in Malaysian
public listed companies. For this Bursa Malaysia recommended public listed companies to adopt GRI
framework for ESG related practices and reporting. Secondly, the code directed Malaysian public

1
Assistant Professor, City University of Science and Information Technology, Peshawar, Pakistan.
2
Faculty Member, IMSciences, University of Science and Technology, Bannu, KP, Pakistan.
3
Assistant Professor, Capital University of Science and Technology, Islamabad.
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Muhammad Zahid et al.

listed companies to focus on ESG related integrated strategies, such as top management commitments
towards ESG, the inclusion of sustainability theme into their companies' mission and vision
statement. Finally, the code stressed onboard structural changes such as to increase women
representation on the board. This notion is backed by the previous author's arguments that women,
compared to men, are more concerned with the social welfare of the people, environmental concerns
and governance strategies of the firm (Groysberg & Bell, 2013; Post, Rahman, & Mcquillen, 2015).
After searching the literature, it is believed that next to the promulgation of MCCG 2012 there is no
such study conducted that investigated the above factors for the improvement of ESG practices in
Malaysia. Hence, the current study tries to fill this gap by achieving the following research objectives:
 To investigate the level of improvement in ESG practices in Malaysia.
 To investigate the status of ESG practices and reporting after the MCCG 2012 promulgation.
 To investigate the role of MCCG 2012, women representation on the board and top
management commitment to improving the ESG practices in Malaysia.
The reminders of the paper are followed by literature review and hypotheses development, research
design, results and discussion and the last section conclude the paper.

LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT

Environmental, Social, and Governance (ESG) Practices
Nowadays, it is considered a socially responsible and an ethical investment to go ahead with ESG
reporting as it has become a key and ideal indicators of risk management, non-financial performance
and management competencies (Friede, Busch, & Bassen, 2015; Galbreath, 2013).
Considering ESG's key role, it covers a wide-ranging issue related to environment like energy and
water usage, natural resource protection, carbon emissions, pollution, and many social responsibility
aspects namely as human rights, fair trade principle, gender equality, product safety, health safety
concerns and governance deals with the leadership of a company, audits and internal controls,
executive pay, shareholder protection, reporting and disclosure, corruption and bribery. In this
retrospective, three notions can be found in the history of ESG.
The first notion goes as back as the 1970s when the focus of ESG came into concept when small group
investors showed their concern to report social and environmental practices of companies
(Richardson, 2009).Moving on to the second occurrence of such notions in the history back in 2006,
when the United Nations (UN) underlined the 'Principles for Responsible Investment (PRI) (UN PRI
2006)'. This initiative was later on adopted as a de facto standard for highlighting ESG issues and
taking a stand on mainstream investment practices. Third in order was the collaboration between the
Coalition from Environmentally Responsible Economies (CERES) and United Nations
Environmental Program (UNEP). The inception of GRI framework was first of its kind which focused
on environmental performance and reporting which later expanded to highlighting the issues that go
beyond the environment in the third generation (G3) of the GRI Principles. Currently, the GRI
framework covers six different categories all of which strengthen ESG and its regulation. The six
categories include the human right, environmental, economic, society, product responsibility and
labour practices and decent work. As it can be noticed, the governance issues are not covered by a
separate category on account of the fact that it is covered under the economic category. As an
implemented regulation, there are many companies, social sector, government and other key
organizations are using GRO framework as part of their ESG practices and effective reporting. The
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most recent of this framework (G4) was published in 2013.

Existing Research on ESG

Galbreath in (2015) examined that ESG criteria are relatively explored. His studies argued that the
studies aimed at exploring ESG mostly focus only one dimension, i.e. environmental, social or
governance. Mostly the interest is based on the financial performance of a firm. Additionally, it has
been established and found that 85% of studies are based on one dimension of ESG instead focusing
on all essential elements (United Nations Environment Program Finance Initiative and Mercer
Investment Consulting 2007) as found by Galbreath in (2013). In most of these studies, a causal
relationship between individual factors or at times combined with a firm' characteristics like financial
performance has yielded with mix findings. There is a growing body of studies focused on ESG issues.
In all case scenarios, the emphasis was based on finding the impact on financial performance by ESG.
Since all ESG issues are noted to be inter-related, a single dimension-focused study will not be as
beneficial and revealing (Galbreath, 2013). Some scholars are of the opinion that a sole focus on the
relationship between ESG dimensions with the financial performance of a firm will result in
weakening moral and ethical considerations which are important for generic future generation needs,
the welfare of society and overall sustainable development goals (Dyllick & Hockerts, 2002;
Richardson, 2009). Based on the aforementioned limitations, a research study that covers areas
beyond direct connection of ESG more than one aspect of a firm is in need (Galbreath, 2013).

ESG Practices in Malaysian Perspective

A history of ESG began when the Malaysian government officiated a requirement for all companies to
disclose their corporate social responsibility in the annual reports of a company that are published at
the end of year-end on 31st December (Bursa Malaysia, 2006). However, it was a voluntary decision
to disclose certain contents of a company. In the same year of 2006, Bursa Malaysia, for the first time
introduced CSR framework by targetting four dimensions namely as a workplace (social internal
stakeholders), community (social external stakeholders), and marketplace (economic) and
environment. Bursa Malaysia defined CSR as a transparent and open business practice based on
ethical values and respect for the employees, community, shareholders, other stakeholders and the
environment. The purpose of CSR is to promote the sustainable value and concern for the society
(Bursa Malaysia,2006). It also recommended GRI reporting framework for the public listed
companies of Malaysia. It is also recommended that the corporate sustainability strategies should be
directed at ESG practices. It was contrary to other studies as they investigated either the impact or
level of CSR and sustainability on the performance of the firm. Conclusively, these studied reported
that the level of reporting is 'low' and also added that different dimension of ESG was also low and
required further improvements in Malaysia (Nazli, Ahmad, Salat, & Haraf, 2013; Zahid & Ghazali,
2015). It also forecasted that by investigating and putting the focus on other factors along with firm
financial performance, ESG practices can be improved and expanded.

Theory and Hypotheses Development

To put in a nutshell, ESG is an effort to satisfy the demands of multiple stakeholders by incorporating
sustainable business practices and to underpin this ideology, stakeholder theory forwarded this notion
in its entirety (Clarkson, 1995; Donaldson & Preston, 1995; Freeman, 1984). To further define
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‘stakeholder theory', Freeman (1984) defines it as a practice of companies where they aim to
reimburse some of the damages they cause to the environment and society with the business
operations in the form of environmental and noise pollution. Drawing on the points of this theory
(stakeholder theory), shareholders, employees, creditors, government, natural environment, society
and suppliers are all part of the stakeholders (Clarkson, 1995; Haigh & Griffiths, 2009). In a broad
retrospective, the interest of shareholders is the responsibility fo the firms by driving a focused and
planned effort towards the well-being of society and individuals (Donaldson & Preston, 1995).

HYPOTHESES DEVELOPMENT
Level of ESG Practices Overtime
The MCCG 2012 advised the board of Malaysian public listed companies for formalizing all
sustainability-related strategies in a manner that 'the board should formalise the company's strategies
for promoting sustainability. Attention should be given to environmental, social and governance
(ESG) aspects of the business which underpin sustainability. Balancing ESG aspects with the interests
of various stakeholders is essential to enhancing investor perception and public trust. The board
should ensure the company discloses these policies and their implementation in the annual report and
the corporate website” (MCCG, 2012, p. 12). As evident from the stakeholder theory, a firm is
required to disclose key relevant information to stakeholders over time. Such practices are a result of-
of social, political, economic and environmental pressures (Deegan & Rankin, 1996; Haniffa &
Cooke, 2005; Zahid & Ghazali, 2015). Furthermore, it has also been found that in emerging
economies such sustainability-related practices are increasing over time due to the modification in
legislation, risks and pressure from ethical investors and groups and an upraise in specific events,
awards, rewarding economic activities, media interest, societal awareness and politics (Haniffa &
Cooke, 2005). In order to stay put and comply with certain regulations and requirements, firms are
providing information to stakeholder for justifying and legitimizing their operations. For these
reasons and more, companies nowadays restore to the practice of disclosing certain economic, social
and environmental information in the annual reports (Haniffa & Cooke, 2005; Tracey, 2014).
Therefore, based on discussion highlighted above, it is hypothesized that:
H1: There is a significant increase in ESG practices in Malaysian PLCs over time.

Malaysian Code on Corporate Governance (MCCG) 2012 and ESG

To bring in reforms in Corporate Governance (CG) the Malaysian government took a momentous step
by announcing their first Malaysian Code on Corporate Governance (MCCG) in March 2000.
Furthermore, in 2007, the code was revised. CG blueprint-2011 was released in July 2011 by Security
Commission (SC) of Malaysia which sets the anticipated CG landscape going forward. Blueprint
served the purpose to accomplish excellence in CG through strengthening self and market discipline
along with encouraging efficient compliance and culture of CG. Afterwards, in 2012, the code was
officially promulgated to conscious the shareholders and board to embrace the understanding of the
idea that being a successful business is not only to accomplish desired financial bottom line rather it is
to be competitive, ethical and sustainable. Another important purpose the code carried to endorse
corporate sustainability with the help of ESG practices in Malaysian public listed firms. So, it was
hypothesized that:

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H2: There is a significant role of MCCG 2012 on ESG practices.

Women on the Board and ESG

Increase in the representation of women on the board was also addressed by MCCG 2012, the 2.2
recommendation of the code described that “the board should establish a policy formalizing its
approach to boardroom diversity. The board through its Nominating Committee should take steps to
ensure that women candidates are sought as part of its recruitment exercise. The board should
explicitly disclose in the annual report its gender diversity policies and targets and the measures taken
to meet those targets”. To have faith in the positive aspects of diversity and be more opportunistic, this
study undertakes that gender diversity on board has a positive part in improving ESG practices
(Galbreath, 2011). The reason behind it was the fact the women are more responsive to the
environment, the welfare of the people organizational strategy for new product and market
development compared to men. When women undertake higher positions this behaviour of caring and
ethical considerations came to limelight (Jaffee & Hyde, 2000). Women directors throw more weight
behind self-transcendent values of social responsibility compare to men (Adams, Funk, Barber, Ho, &
Odean, 2012; Groysberg & Bell, 2013).
Hence, it is hypothesized that:
H3: There is a significant role of women representation on the board for ESG practices.

Top Management/Leadership Commitment and ESG

Top management commitment is considered as a strong internal force to foster ESG practices within
the organization (Starik & Rands, 1995). Top management commitment towards ESG practices
matters to drive ESG agenda and integrate it into the overall business strategies and organizational
culture. Moreover, they can affect the tendency of an organization to engage with such practices
(Moyano-Fuentes, Maqueira-Marín, & Bruque-Cámara, 2018; SHRM Report, 2011). Such
engagements of top management make a firm socially responsible and have the role in improving the
reputation and performance of a firm (Waldman, Siegel, & Javidan, 2004). The stakeholder theory
further explains the same notion that the top management has its role to ensure the stakes of all the
stakeholders by managing and integrating into their business activities (Freeman, 1984). Further
endorsing that, top management commitments strengthen the relationships with stakeholders and
organization can avail benefits like improved efficiency, positive influence on regulation, reduced
risk and better stakeholder management (WBCSD, 2000). Hence, based on the above discussion top
management may play a very positive role in order to improve the level of ESG practices. Hence, it
hypothesized that:
H4: There is a significant role of top management commitment to improving ESG practices.

RESEARCH METHODS
Malaysian public listed firms as a unit of analysis are used in this study. The study sample consists of
878 public listed companies from 12 different sectors exhibited in table 1 for the period of three years
(2011-2013).

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Table 1: Total Sample Size Sector wise

# Sectors No. of Co.’s
1 Consumer Products 173
2 Industrial Products 205
3 Construction 45
4 Trading Service 198
5 Finance 32
6 Infrastructure Projects 16
7 Hotels 12
8 Properties 89
9 Plantation 48
10 Mining 3
11 Technology 33
12 Real Estate 24
Total Sample Size 878
Form each sector the companies were selected for observation on a random basis. This specific study
incorporated ESG reporting index of Zahid & Ghazali (2015) for the measurement of ESG practices.
This very index the study developed is based on GRI reporting manual which is recommended by
Bursa Malaysia for ESG reporting. Content analysis procedure of company annual reports was used
for data collection purpose. Research on quantitative data collected from annual reports the content
analysis is most widely used procedure (Amran & Haniffa, 2011; Zahid & Ghazali, 2015). The content
analysis procedure is the most widely used method in research on quantitative data collected from
annual reports (Amran & Haniffa, 2011; Zahid & Ghazali, 2015). To record the contents mentioned in
table 2 the study incorporated equal weighted scoring technique using the code of 1 for the company
reports the content and 0 for otherwise ((Gao & Bansal, 2013; Ioannou & Serafeim, 2014). Highest
score on content analysis is implied as high performance (Lee, Singal, & Kang, 2013). For data
analysis, the independent sample t-test was used. “An independent-samples t-test is used when you
want to compare the mean score, on some continuous variable, for two different groups of subjects”
(Pallant, 2002, p. 205).

Table 2: Dimensions of Corporate Sustainability

Dimensions of
Corporate Definition Key Stakeholders Focusing Areas 2
Sustainability
Environmental The environmental dimension of Environmental Management System (EMS) and
sustainability concerns the Certifications, Material Used and Produced,
organization’s impact on living and Material Recycled, Energy Consumption and
non-living natural systems, including Reduction, Water Consumption, Biodiversity,
land, air, water and ecosystems. (GRI, Emissions including Greenhouse Gases (GHG),
2013) Effluents and Waste Reductions, Product
Environmental Impacts, Transportation Impacts,
Suppliers’ Environmental Impacts ,
Environmental Related Awards
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Social3 The social dimension of sustainability External (Community) and Internal (Employees)
concerns the impacts the organization Community Engagement through Philanthropy,
has on the social systems within which Product Responsibility, Customer Satisfact ion,
it operates. (GRI, 2013) Products and Services Labeling (Eco-Labelling),
Education Facilities (Training and Internships) ,
Cultural, Heritage and Celebration of Special
Occasion, Sports and Other Activities , Shelters
Facilities, Donations, Social Sustainability
Related Awards

Decent Labor Practices, Employment

Opportunities, Occupational Health and Safety,
Employee’s development, training and
education, Diversity and Equal Opportunities,
Supplier Assessment regarding Labor Practices,
Assurance of Human Rights, The Labor Union
and Bargaining Power, Prevent Child Labor,
Drinking water on workplace, Employees
Satisfaction Survey, Workplace Sustainability
Awards

Governance The organization’s impacts on the Corporate Governance Practices, Reporting of

economic conditions of its stakeholders, Performance, Market presence (Min Wages),
and on economic systems at local, Locals in Management, Indirect Economic
national, and global levels. The Impact, Direct Economic Impact, R&D
economic category illustrates the flow Activities, Procurement Activities, Internal
of capital among different stakeholders Control Mechanism, Anti-corruption and whistle
and the main economic impacts of the Blowing, Ethical Standards, Product
organization throughout society. (GRI, Responsibility, Economic Sustainability Awards
2013)

2
Note: Bursa Malaysia divided social sustainability into two categories, internal ( workplace-related issues) and
external (community engagement)
3
Note: Definition of individual focusing area is available in Global Reporting Initiatives Framework (GRI, 2013)
Source: Authors compilation

RESULTS AND DISCUSSION

Table 2 shows the descriptive statistics of ESG practices and the frequencies of MCCG, diversity and
leadership commitment. The total score of ESG ranges from 6.00 to 43.00 (i.e. denoting by minimum
and maximum) for three years. The mean value for ESG was 20.16. The Table also shows the
frequency of MCCG, diversity and leadership denoting 'Yes' for disclosed and 'No' for not disclosing
respectively.

Table 3: Descriptive Statistics

N Min Max Mean S.D Skewness Kurtosis
Statistic Statistic Statistic Statistic Statistic Statistic S.E Statistic S.E
ESG 878 6.00 43.00 20.16 6.83 0.98 0.08 1.05 0.16
Yes No %Yes %No Cum.% (Yes/No)
MCCG 878 0.00 1.00 583 295 66.4 33.6 66.4 100
Diversity 878 0.00 1.00 531 347 60.5 39.5 60.5 100
Leadership 878 0.00 1.00 488 390 55.6 44.4 55.6 100
Min= Minimum, Max= Maximum, S.D= Standard Deviation, S.E= Std. Error

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Muhammad Zahid et al.

Table 3 shows the results of t-test for the extent of ESG practices over time. The results report that
there a significant change in ESG practices over the time period of 2011-2013. Moreover, there is a
slight upward trend in the mean values (2011 0.566, 2012 0.614, 2013 0.634) and mean plots in Figure
01 of ESG practices, hence supported H1 of the study. The results confirm the essence of stakeholder
theory that Malaysian public listed companies are adopting ESG practices for the satisfaction of broad
spectrum of stakeholders' overtime. Moreover, these companies are now considered ESG practices a
sign of integrity, legitimacy, reputation and better performance.

Table 4: T-Test Results

Levene's Test
for Equality of t-test for equality of means
Variances
95%
Confidence
Mean 2011 (19.17) and Mean Std. Error Interval of the
F Sig. t df Sig.
2013 (21.00) Difference Difference Difference
Lower Upper
Equal variances
.440 .507 3.275 583 .001*** 1.830 .559 .7328 2.928
assumed
ESG
Equal variances
3.275 582.537 .001*** 1.830 .559 .7326 2.928
not assumed
Note: Significant levels **p < .01. ***p < .001

Figure 1: Years wise trend of ESG practices

Table 4 presents the results of t-test that there is a significant change reported in ESG practices due to
MCCG 2012. Moreover, the results also reported that there is a significant change in ESG practices
during pre (2011) and post (2013) periods of MCCG 2012, and mean plots in Figure 02 of ESG
practices hence, supported H2 of the study. The results indicated that MCCG 2012 has a positive
impact on ESG status. It is further noted that for voluntary disclosures particularly in developing
countries regulatory steps are important. This regulatory thrust may increase the level of such
disclosures.

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Levene's Test
for Equality of t-test for equality of means
Variances
95%
Group Statistics: Mean Confidence
Mean Std. Error Interval of the
PreMCCG 19.17 and F Sig. t df Sig.
Difference Difference Difference
PostMCCG 21.00
Lower Upper
Equal variances
.440 .507 3.275 583 .001*** 1.830 .559 .7328 2.928
assumed
ESG
Equal variances
3.275 582.537 .001*** 1.830 .559 .7326 2.928
not assumed
Note: Significant levels **p < .01. ***p < .001

Figure 2: MCCG Pre & Post Periods and ESG practices

Table 5 reports the results of t-test that there is a significant change in ESG practices due to boardroom
diversity (women representation). The results indicated that women representation on board
significantly changes the level of ESG practices. Figure 03 further confirms the crux of hypothesis.
Results supported the notion that those companies having women director on board perform well for
ESG practices. These findings are in accordance with the previous findings that women exhibit more
friendly behaviour towards philanthropy and other social welfare activities. Such as psychological
edge that takes notice of stakeholders' interests, women unique leadership styles, a significant
difference in thinking, different in beliefs and values of men and women (Groysberg & Bell, 2013).

Table 5: T-Test Results

Levene's Test
t-test for equality of means
for Equality of Variances
95%
Group Statistics: Mean Confidence
Mean Std. Error Interval of the
Boardroom Diversity Yes F Sig. t df Sig.
Difference Difference Difference
22.53 and Non 16.52
Lower Upper
Equal variances
57.44 .507 14.114 876 .000 6.008 .426 5.172 6.844
assumed
ESG
Equal variances not
15.380 875.948 .000 6.008 .391 5.242 6.775
assumed
Note: Significant levels **p < .01. ***p < .001

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Muhammad Zahid et al.

Figure 3: Gender Diversity and ESG practices

Table 6 reports the results of t-test that there is a significant change in ESG practices due to top
management commitment by the organizations. The results indicated that top management
commitment matters and changes significantly the level of ESG practices as shows in Figure 04 as
well. Results supported the notion that those companies having committed through their leadership
can perform well for ESG practices. These findings are in accordance with the previous findings that
the success and extent of ESG practices undertaken by the business firms are affected by the support of
top management and leadership of these firms He et al., 2018; Laszlo, 2008; Willard, 2005)
Levene's Test
for Equality of t-test for equality of means
Variances
95%
Group Statistics: Mean Top Confidence
Mean Std. Error Interval of the
Management Commitment F Sig. t df Sig.
Difference Difference Difference
Yes 866 and No 12
Lower Upper
Equal variances
.654 .419 3.639 876 .000 7.173 1.971 3.304 11.04
assumed
ESG
Equal variances not
4.250 11.423 .001 7.173 1.971 3.475 10.870
assumed
Note: Significant levels **p < .01. ***p < .001

Figure 4: Top Management Commitment and ESG practices

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CONCLUSION AND RECOMMENDATIONS

The aim of this specific study was to find out the ESG practices level in Malaysian public listed
companies. Furthermore, this study aims to investigate the role of MCCG 2012, gender diversity
(women representation) and commitment of top management for further improvement in ESG
practices. Results of the first objective disclosed that over a period of time there is a substantial
improvement in ESG practices. Over the period of 2011, 2012 and 2013 there has been a considerable
increase in the level of ESG practices. These outcomes indicated that public listed Malaysian
companies grasped the importance of ESG practices and are keen to implement and stick to such
practices.
The results confirmed that legitimacy and sustainability are the reasons that the Malaysian public
listed companies want to operate in such environment. Moreover, their operation strengthens the
notion of stakeholder's satisfaction. Support for the legitimate practices the findings stated that
MCCG 2012 attempts to safeguard the emergence of ESG practices in Malaysia. As mentioned above
MCCG 2012 declaration increased ESG practices which further indicates that regulatory push is
highly recommended for developing economies such as Malaysia to increase the level of ESG
practices as voluntary disclosures. Lastly, the finding suggests that the boardroom diversity (women
representation) has a significantly positive impact on the level of ESG practices in public listed
companies of Malaysia. The focus on ESG practices and boardroom gender diversity is considered
and focused by MCCG 2012 and hence substantiated that both are vital for diversity, inclusion and a
positive driver for sustainable practices in public listed companies of Malaysia.
Therefore, it is very important and highly recommended for the Malaysian government to focus on
these steps and should incentivize these companies through awards, subsidies and tax rebates in order
to flourish ESG practices.
The findings mentioned above have enormous ways for theoretical and practical implications. The
results of the study contribute to the limited and existing literature on ESG practices especially in the
context of Malaysia. Secondly, this specific study has novelty in findings by investigating the role of
level of ESG practices, MCCG 2012, boardroom gender diversity and top management commitment
in public listed companies of Malaysia. Thirdly, the study data collection of ESG practices was based
on GRI reporting framework which is under the recommendation of Bursa Malaysia to report
sustainability practices. This ESG index covered three dimensions including environmental, social,
and governance practices recommended by the Bursa Malaysia (exhibited in Table 2). This ESG index
has value for Malaysian public listed companies to incorporate and improve ESG practices in their
annual reports. The findings of the study will have practical implications for the government of
Malaysia in order to improve the level of ESG practices in the corporate sector and step ahead towards
sustainable industrialization. Moreover, the findings of the study will also be useful for the relevant
authorities such as Bursa Malaysia, security commission and other regulatory bodies.
Alongside, implications this study has some limitations. The findings of the current study are only
based on mean comparison conditioned by some regulatory steps such as MCCG 2012, boardroom
gender diversity and top management commitments towards EGS practices. Hence, in future studies,
it is recommended to examine the role of other factors such as firm size, age, profitability and
governance characteristics with ESG practices in the Malaysian context. Moreover, in future, some
longitudinal studies on the subject should be examined.

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