In recent years, the ESG (Environmental, Social, Governance) wave in Malaysia has grown tremendously, with major entities in Malaysia introducing ESG expectations upon themselves, their investee companies and corresponding supply chains.

Bursa Malaysia

On 4 December 2023, Bursa Malaysia launched their platform for mandatory ESG reporting by public listed companies on the Main and ACE markets.

Securities Commission (SC)

On 28 October 2023, Capital Markets Malaysia, SC’s affiliate launched a Simplified ESG Disclosure Guide (SEDG), making Malaysia the first country globally to provide small-to-medium enterprises (SMEs) within global supply chains with a streamlined and standardised set of guidelines in relation to environment, social and governance (ESG) disclosures.

Permodalan Nasional Berhad (PNB)

April 2022: PNB announced their Sustainable Framework: 10 ESG Commitments and later their Labour Rights Policy, covering forced and child labour as a key material issue

August 2023: PNB released their Sustainability Policy

Khazanah Nasional Berhad (KNB)

Malaysia’s sovereign wealth fund’s Sustainability Framework and Targets targets decent work as a key focus area. In March 2023 , Khazanah launched its Dana Impak programme to invest in projects that align with ESG-related themes such as clean energy, climate technology, and social inclusion.

Ministry of Human Resources (MOHR)

In September 2023, the MOHR released their Guidelines for Preventing and Eradicating Forced Labor Practices in the Workplace, a 50-page effort of the Department of Labour and the Anti-Trafficking in Persons and Migrant Anti-Smuggling Council (MAPO) of the Ministry of the Interior (KDN) aimed at raising awareness among stakeholders on the issue of forced labour practices. It is accompanied with the goal to hit the target set of zero forced labour by 2030.

The growing enforcement on ESG is not surprising, given Malaysia’s need to comply if we hope to remain competitive and relevant in global supply chains.

If you run or represent a business that hires migrant workers, this wave will eventually meet your doorstep. The S(Social) pillar under typical ESG Frameworks addresses the need for businesses to eliminate modern slavery, human trafficking, forced labour and other exploitative employment practices in their workforce and supply chains.

How businesses recruit and manage foreign workers has a huge impact on their ability to comply or face the consequences of inaction. In 2020 to 2022 alone, 8 Malaysian companies focusing on palm oil and rubber sectors were slapped with a Withhold Release Order (WRO) by the US Customs and Border Protection (CBP).

As a business that hires foreign workers, you can start to address forced labour concerns by learning about the common challenges businesses face in ensuring compliance with ethical recruitment.