KUALA LUMPUR, 6 March 2013 – Sustainability is an issue that can no longer be ignored for the ASEAN business community, but many companies are at different stages of understanding, according to a new PwC Malaysia survey and report.
81% of survey respondents said that sustainability is extremely or very relevant to their business but less than half actually have a strategy aligned with their business goals.
These findings are taken from the PwC Malaysia report ‘Going beyond philanthropy?’ The report is based on analysis of the views of 211 companies in the ASEAN-5, which comprises the five largest developing countries in the Association of Southeast Asian Nations i.e. Malaysia, Thailand, Indonesia, Philippines and Vietnam. The survey seeks to understand how companies are embedding sustainability in a strategic manner across their business and what the key driving forces are.
Sustainability goes hand in hand with risk management. It is synonymous with building future long-term resilience for the business, which is only possible with a strong tone from the top, a critical component lacking among the companies surveyed. Only 3% have a strong leadership structure in place to spearhead sustainability initiatives effectively, and only 35% have a dedicated team to drive, monitor and measure their sustainability strategy.
“There seems to be a fundamental disconnect - companies recognise the relevance of sustainability to their business, but few are actually making it a regular boardroom agenda. Companies need to publish and share their sustainability initiatives regularly in their annual reports or a standalone sustainability report if they are keen on building genuine public goodwill. Trust is an asset which must be earned in the right manner to protect the company’s brand and reputation among its stakeholders,” said Sundara Raj, Consulting Leader, PwC Advisory Services Malaysia.
“CEOs should reinforce this culture of transparency within the company by working directly with their stakeholders like employees, suppliers and investors to develop their sustainability strategy, and use various communication channels to get feedback,” he continued.
Overall only 12% of companies engage with all their stakeholders including their customers, investors/shareholders, regulatory bodies and their local communities.
However, the findings suggest that sustainability reporting is on the rise in the ASEAN region.
Nearly 80% of Malaysian companies report sustainability in some form, contributed largely by Bursa Malaysia’s requirement for all public listed companies to disclose their sustainability activities in their annual report.
Even so, the quality of reporting in the region can be improved. Only 26% have adopted a global reporting framework to guide their reporting and 18% have independent third-party assurance for their sustainability reports.
“Companies need to look beyond third-party assurance as a mere ‘box ticking’ exercise. They should see the value in accurately reporting their sustainability activities using frameworks such as the Global Reporting Initiative (GRI) framework to benchmark against peers and competitors,” said Jack Cunningham, Associate Director, PwC Advisory Services Malaysia.
“Having a proper verification process in place speaks well of the organisation’s credibility, which can be an effective differentiator in the marketplace,” he emphasised.
Energy and carbon-related costs is recognised as the number one sustainability driver over the next five years among the respondents.
It is evident that companies need to have a proper system to prioritise stakeholders and identify the issues that should be focused on because it is not realistic for businesses to do everything.
Companies can also explore a merit-based employee reward system tied to sustainability-related KPIs to promote sustainability management as good corporate behaviour and create a sense of ownership in their sustainability vision.
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1. PwC Malaysia did an online survey among prominent companies across different industries in Malaysia, Thailand, Indonesia, Philippines and Vietnam, in August and September 2012.
2. The survey explores how ASEAN companies are embedding sustainability in their business. It also studies how they structure and manage sustainability, and engage with their stakeholders.
3. The full report is available at http://www.pwc.com/my/en/publications/pulse-check-on-sustainability.jhtml
4. Watch the event opening video on the survey key findings at http://www.pwc.com/my/en/events/sustainability-strategy.jhtml
5. PwC's Sustainability and Climate Change (S&CC) group helps both public and private sector clients address the specific and immediate issues relating to sustainability, and helps with longer-term strategic thinking. For more information on our services, visit http://www.pwc.com/my/sustainability
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© 2013 PwC. All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to the individual members of the PricewaterhouseCoopers organisation in Malaysia, each of which is a separate and independent legal entity. Please see www.pwc.com/structure for further details.