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HONOURING MALAYSIA’S BEST PERFORMERS IN ESG EXCELLENCE

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About

For over a decade, The Edge has continued to evaluate and recognise top performing companies and their continuous pursuit of growth opportunities while ensuring a right balance between profits and best business practices. Environmental, Social and Governance principles are crucial to developing strong, resilient companies that can deliver long-term values to investors, stakeholders and the communities they serve.

This year, The Edge’s inaugural ESG Awards 2022 will set out to recognise those that have truly adopted the mantra of ‘business for good’ and have made positive contribution to the business, society and the environment through successful ESG practices.

As proven by consistent and rising demand amongst investors, stakeholders and communities for the adoption and evaluation of ESG practices, The Edge ESG Awards aim to:

  • Promote ESG adoption amongst Malaysian companies by recognising their contributions and successes in adopting good ESG practices
  • Encourage ESG leadership amongst industry leaders and professionals in delivering positive impact for their business, society and the environment

Methodology

Introduction

  1. The Edge ESG Awards is aimed at acknowledging public-listed companies (PLCs) and asset management firms that are ESG leaders in Malaysia.

  2. There are two categories to the awards:

    1. Equities: The Edge is working with Bursa Malaysia and FTSE Russell to reward best-performing PLCs using FTSE’s methodology;

    2. Funds: The Edge is working with Morningstar to reward best-performing asset management firms using its methodology.

  3. The winner’s list will be published in The Edge Weekly.

  4. There is no application process to participate in the Awards. Companies that are in the eligible universe will be considered for the Awards. The eligible universe for the equities category are PLCs that are constituents of the FTSE Bursa Malaysia EMAS Index, while the eligible universe for the funds category are funds that qualify as Sustainable and Responsible Investment Funds, according to the Securities Commission Malaysia.

The Edge ESG Awards Equities Category

  1. Eligibility:

    1. PLCs must be constituents of the FTSE Bursa Malaysia EMAS index as of June 2022.

    2. Excluded:

      1. Manufacturers of tobacco, coal and weapons;

      2. PLCs that are excluded from the FTSE4Good Bursa Malaysia (F4GBM) Index due to controversies or for failing to address specific product requirements;

      3. PLCs that are suspended, under the stock exchange’s watchlist or subsequently delisted prior to the date of The Edge-ESG Awards;

      4. PLCs that have significant adverse news related to ESG in the past year;

      5. PLCs that do not meet the minimum Climate Change score thresholds as per the FTSE4Good Index series inclusion rules. The thresholds are determined by FTSE’s classification for Emerging Markets according to the FTSE Country Classification scheme, and by the PLCs’ Industry Classification Benchmark (ICB) Subsector level assignment.

      6. ICB Subsector Impact Categories Minimum Climate Change Scores
        Primary Impact Subsectors Score of 3 required
        Secondary Impact Subsectors Score of 1 required
      7. Bursa Malaysia Bhd recuses itself from the awards.

  1. Awards categories:

    1. Best performing company by Bursa Sector Classification (12 sectors)

    2. Most improved ESG performance over 3 years by market capitalisation (4 categories)

    3. Most consistent performer over 5 years

    4. Newcomer

    5. Top 3 performers in ASEAN

    6. Long-term achiever

      1. This is a special category for the inaugural 2022 ESG award.

  2. Methodology:

    1. For The Edge ESG Awards that is expected to be held in November 2022, the FTSE4Good ESG rating score as of June 2022, which is the latest available data, will be used as the measurement. The PLCs’ ESG rating score is updated annually.

    2. The FTSE4Good ESG ratings model looks at 14 themes, which are underpinned by more than 300 indicators. An exposure level of high, medium, low or negligible to each theme is applied to each PLCs within the eligible universe, based on the PLC’s line of business.

    3. The PLC is then assessed and scored using the relevant indicators to see how well it is mitigating its ESG risks.

    4. The Climate Change score thresholds are based on the enhanced FTSE4Good Index series Ground Rules. Thresholds are determined by FTSE’s classification of developed and emerging markets, as well by PLCs’ ICB Industry level classification.

    5. The assessment is carried out by FTSE Russell based on publicly-disclosed information, and a risk-exposure weighted ESG score will be computed accordingly.

    6. For more information click here

The Edge ESG Awards Funds Category

  1. Eligibility:

    1. Sustainable and Responsible Investment (SRI) Funds recognised by the Securities Commission Malaysia, and

    2. possess the Morningstar Sustainability Rating of 3 globes and above, and

    3. are launched before the year of award.

  2. Awards categories:

    1. Best overall winner

    2. Best fund based on asset class (3 categories)

    3. Best impact (5 categories)

    4. Best low carbon

    5. Best in E, S and G

  3. Fund size and financial performance are not considered in the assessment. However, if the winning fund generates abnormally negative financial returns relative to the overall market conditions, the event organisers will have the discretion to adjust the results.

  4. The assessments are based on latest information of the funds as at 31 July 2022 (sustainability rating) and 30 June 2022 (carbon data) for The Edge ESG Awards 2022.

  5. Morningstar Sustainability Rating methodology:

    1. The Morningstar Sustainability Rating aims to help investors evaluate relative ESG risks within portfolios. The ratings are determined using a bottom-up assessment of underlying holdings within a fund, underpinned by Morningstar Sustainalytics’ methodology for assessing corporate and sovereign ESG risk (see 5d). The Rating is issued on a monthly basis.

    2. The calculation of the rating score involves several steps to represent the relative risk within each portfolio. The output of the rating is a category of 1 to 5 “globes” for each eligible portfolio.

    3. The higher the number of “globes”, the lower the portfolio’s ESG risk, relative to other funds in the same category.

    4. The Morningstar Sustainability Rating is calculated using Sustainalytics’ ESG Risk Ratings for corporate issuers and Sustainalytics’ Country Risk Ratings for sovereign issuers, and is based on historical holdings.

      1. Sustainalytics’ ESG Risk Ratings measures a company’s exposure to industry-specific material ESG risks and how well the company is managing those risks.

      2. Sustainalytics’ Country Risk Ratings assesses a sovereign entity’s socioeconomic wellbeing by combining an assessment of the government entity’s current stock of capital with an assessment of its ability to manage the wealth in a sustainable manner.

      3. For more information click here