News & Announcements

Support for new ESG Index
November 06, 2013 | Publication : The Star Online

PETALING JAYA: Socially responsible investing in Malaysia is set to get a shot in the arm following the announcement that Valuecap Sdn. Bhd. will be investing RM1bil into companies that meet the stipulated criteria.

ValueCAP, a fund set up by the Government in 2002 to invest in undervalued stocks in the local bourse, is bullish about the prospects of such investments.

According to proposals in Budget 2014, ValueCAP would be investing the amount in companies on the Environmental, Social and Governance (ESG) Index.

Commenting on this, a ValueCAP official told StarBiz: “It will enable ValueCAP to derive further value from investing in listed companies that demonstrate good sustainability practices, in particular companies which will be constituents of the ESG Index to be created”.

There has been much interest recently by funds and individual investors in companies that are ethically and environmentally sound.

In October, Norway’s sovereign wealth fund blacklisted five companies, two of which are Malaysian timber companies – Sarawak’s WTK Holdings Bhd and Ta Ann Holdings Bhd - for allegedly being involved in environmentally damaging activities.

Nestle Malaysia is one of a handful of local firms, which have been  selected to be part of the 2013 DowJones Sustainability Emerging Markets Index, which focuses on leading sustainable-driven companies in emerging markets.

The global market for ESG assets have been estimated at between US$1 3 trillion and US$14 trillion as of end-2012.

Recently, Bernama reported that Norway’s ambassador to Malaysia Hans Ola Urstad expressed interest in investing in social responsible Malaysian companies with zero tolerance for corruption.

To-date the Norwegian Pension Fund has invested some RM5bil in about 80 companies in the country in various sectors including green technology-based firms.

However, the ESG Index is still at the nascent stage in the country.

According to ValueCAP, whose shareholders are Khazanah Nasional Bhd, Permodalan Nasional Bhd and Kumpulan Wang Persaraan, a local index for such stocks has yet to be established.

“The ESG Index has yet to be created. The relevant supportive framework and appropriate mechanism to be put in place in the months ahead will facilitate benchmarking for sustainable investing practices among listed companies in the domestic markets,” it said. But, the initiative to create an ESG Index could not come at a better time, said the company.

Participating in the growing ESG investment segment would position Malaysia as a capital market for socially responsible investments.

The Government’s initiative comes with its commitment to drive Malaysia’s sustainable growth agenda within the corporate sector.