CLSA Corporate Governance Watch 2007: Corporate Governance in Asia, September 27, 2007
On the surface, Malaysia’s corporate-governance environment has generally been on an improving trend, as evidenced by favourable remarks made by the World Bank regarding protection of investors in early 2007.
Presently, we find the companies more conscious of climate change and starting to tackle the issues are generally in industries where globally these sectors are being brought to task. In our survey this year, technology, materials, together with power and gas, are the three sectors with the most companies that scored 50% or higher for C&G. This is certainly not because these companies are cleaner than others. However, that they are already aware of the issues and beginning to address them gives these companies a positive score in our C&G survey. It makes more sense for the companies that are in more polluting industries to start first in seeking to control and offset their emissions.
In Malaysia, the CLSA Clean & Green survey was sent out to 38 companies. Out of these, 33 responded with either surveys filled in or an outright decline in participation.Out of the total, 22 companies (58%) sent the survey form back to us. Out of these 22 companies, 20 had positive scores (ie, not zero). Generally, there is still a view that this issue is not directly relevant to companies and their business models; we had anticipated a higher rate of coporations with zero scores.
The high scorers were IJM, YTL Power, Resorts World, Tanjong, Plus, Genting, WCT and Lafarge. We saw decent representation by construction-related companies and those with emission issues, eg transportation, power plants and plantations. Some of those that scored high on CG, however, did poorly on C&G, for example Public Bank.
YTL Power came in with a C&G score of 55%. Out of its businesses, UK’s Wessex Water appears to have been the most proactive on this front. We also note that the group is in the process of obtaining IS0 14001 certification for its power stations in Paka and Pasir Gudang in Malaysia and mechanisms are being implemented for the management of power plant gaseous emissions, waste effluent, discharge cooling water and industrial scheduled waste.
Lafarge Malayan Cement scored highly at 55% and would have had the highest marks if not for the individual/committee responsible for the company’s GHG emissions not reporting directly to the board but to the CEO. Being a cement maker within a global group, environmental issues appear at the top of their agenda. According to Lafarge Malayan Cement (LMC), there are no government regulations on CO2 emissions in Malaysia, but LMC follows international standards for greenhouse gas emissions set by Lafarge which are more stringent than regulations in Malaysia. LMC’s target is to reduce emissions by 20% in 2010 from 1990 levels.
IJM scored a respectable 50% for C&G. The company is ISO 14000 accredited. Key measures and focus has been at IJM Plantations. This subsidiary quantified annual carbon sequestration in its 2006 annual report.