Abstract
There is an increasing demand from stakeholders for higher transparency on environmental, social and governance (ESG) disclosures. Yet not much is known about the state of sustainability reporting in Malaysia especially in the property and construction industry. This paper aims to fill this gap accordingly. Content analysis of corporate websites, sustainability and annual reports was adopted as the main methodology in this study. Findings show that corporate governance indicators are most reported by Malaysian construction companies compared to other environmental or social indicators. It was also found that details on actual health and safety performance of these companies and the initiatives implemented were largely absent from their reporting. Given the increasing number of rating tools in the capital markets which serve to rank and file companies based on their sustainability disclosures and performance such as the Dow Jones Sustainability Index (DJSI) and FTSE4Good Index, it is questionable as to how reliable this can be done for the Malaysian property and construction market. The paper will be useful to construction management practitioners and ESG analysts with a focus on Asian markets.
Highlights
Since the aftermath of the Earth Summit in 1992, Agenda 21 was formulated as a blueprint for sustainable development
Given the increasing number of rating tools in the capital markets which serve to rank and file companies based on their sustainability disclosures and performance such as the Dow Jones Sustainability Index (DJSI) and FTSE4Good Index, it is questionable as to how reliable this can be done for the Malaysian property and construction market
Based on the non-financial reporting guidelines published by the Financial Services Council (FSC) and Australian Council of Superannuation Investors (ACSI) (2011), nine core issues deemed to be most important to institutional investors such as climate change, environmental management, environmental efficiency, other environmental matters, health and safety, corporate conduct, stakeholder engagement, remuneration and risk management as well as board diversity is cross checked against disclosures done by companies
Summary
Since the aftermath of the Earth Summit in 1992, Agenda 21 (see UNDESA, 1992) was formulated as a blueprint for sustainable development. Pearce (2006) outlines an economist’s approach to sustainability arguing that an asset-based approach can be applied to provide real insights into the function of the construction sector and its broader role in social and economic development. According to the GRI guidelines, a typical report should consist of the following elements: vision and strategy; governance structure and management; GRI content index and performance criteria (economic, environmental, and social) (GRI, 2013). Such disclosures are usually based on ‘materiality’ which is defined by GRI as criteria that reflect the companies’ significant economic, environmental and social impacts or that would substantively influence the assessments and decision of stakeholders
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