INTHEBLACK December 2021 - Magazine - Page 31
“MORE PEOPLE ARE LOOKING
TO THE SOCIAL IMPACT OF
BUSINESS, WHICH I THINK IS
IMPORTANT. AND, AT THE END
OF THE DAY, IF WE CONTINUE TO
WARM THE EARTH, WE’RE NOT
GOING TO HAVE ANYWHERE TO
LIVE OR TO DO BUSINESS.”
DATUK MUHAMAD UMAR SWIFT FCPA,
BURSA MALAYSIA
RM8.1 billion (A$2.7 billion) by local
institutional investors. The retail segment
continued to be net buyers well into 2021.
Swift says the introduction of online
education platforms such as Bursa
Academy and Mirror, Learn & Trade has
contributed to driving growth among
younger institutional investors.
“What was once seen as an older
generation’s investment is now seen as
accessible and interesting because of online
trading,” says Swift. “The move to working
and investing from home required upscaling
to support brokers and, I’m happy to say, it’s
achieved dividends. It was a collective effort
by the whole industry.”
PROMOTING SUSTAINABLE GROWTH
As economies across the globe transition
to recovery, Swift says local exchanges play
a key role in helping companies return to
profitability.
“We need to look at what market rules
may impede them,” he says. “We also
have an opportunity to promote ESG
[environmental, social and governance]
investment. Is there a causal nexus between
ESG and profit? My contention is that there
is, but I need to demonstrate that.”
Bursa Malaysia’s promotion of ESG
investment comes at time of growing
investor demand for accountability and
action on issues such as climate change. The
recent Intergovernmental Panel on Climate
Change’s (IPCC) report, for instance, sets
a clear mandate for urgent action from
financial decision-makers.
“Consumers are embracing sustainability,”
says Swift. “Traditionally, governance
STRENGTHENING
ESG CREDENTIALS
moved the dial the most, because poor
governance is generally an indicator of
underperformance.
“Since the pandemic, however, more
people are looking to the social impact of
business, which I think is important. And,
at the end of the day, if we continue to
warm the earth, we’re not going to have
anywhere to live or to do business.”
Good ESG behaviour should be rewarded,
adds Swift.
“Bursa Malaysia currently has 76 companies
qualifying for our FTSE4Good index,
accounting for 24 per cent of the eligible
universe, which refers to publicly listed
companies in the Bursa Malaysia EMAS
Index. There is still room for improvement.
My call to action is, if you are an immediate
manufacturer and your customers want you
to be ‘green’ and you’re not, they’ll move
their purchasing to someone who is.”
Swift notes that capital investments in
ESG are increasing, along with the number
of signatories to sustainable investment
practices. The challenge, however, is the
development of a green taxonomy.
He adds that countries such as Malaysia
are developing green taxonomies for their
jurisdictions. Bank Negara, for instance, is
finalising a climate change and principlesbased taxonomy that will create a common
language for categorising economic activities
based on the impact on climate change.
“At the moment, we have best practice,
we talk about the disclosure that we want to
see, and we are seeing more maturity in the
quality of [climate] reporting,” says Swift.
“I think we’ll soon have certain parameters
where disclosure is mandatory.”
Sustainability forms an important pillar
of Bursa Malaysia’s strategic direction, and
Swift believes the common language of a
taxonomy will provide greater certainty for
the market.
“I’m a great believer in shareholders
actively engaging management and giving
feedback,” says Swift. “Our virtual AGMs
are very well attended – during the last one,
I answered about 170 questions.
“I see this as a good sign, because it shows
that people are interested. They are keen to
participate, and they expect accountability.”
In July this year, Bursa Malaysia
and global index provider FTSE
Russell launched FTSE4Good
Bursa Malaysia Shariah
(F4GBMS), an ESG-themed
index designed to track
constituents in the FTSE4Good
Bursa Malaysia (F4GBM) Index
that are Shariah-compliant,
according to the Securities
Commission Malaysia Shariah
Advisory Council screening
methodology.
Shariah investing mandates
social values and good
governance by filtering out
businesses that engage in
activities deemed unethical.
Datuk Muhamad Umar Swift
FCPA, CEO of Bursa Malaysia,
says the launch of the F4GBMS
Index caters to the growing
demand for Shariah-compliant
investment tools.
“With the convergence
between ESG and Islamic
investing, it introduces a new
dimension for local fund
managers by embedding
Shariah principles into an ESG
index,” he says.
The F4GBM was launched in
2014, with 24 publicly listed
companies among its
constituents. Today, there are 76.
“We also have Bursa Sustain,
which is a resource centre to
help people better understand
ESG and what it means to
them,” says Swift.
“COVID-19 has given us all an
opportunity to disrupt supply
chains, and we should be
looking to new markets that fit
with our ESG credentials, rather
than just settling back into our
previous ways.
“It’s time to strengthen
relationships – and build new
ones – based on an ESG lens.
A commitment to ESG will also
make it easier to raise capital
going forward. Momentum is
growing and the pandemic
has been a call to action.”
intheblack.com December 2021 31