07/12/2025

ON SUNDAY December 7, 2025 theSunday Special V

Why governance alone cannot save ESG Governance – the “G” in ESG – is often seen as the lever to ensure environmental and social goals are met. But this assump tion may be misplaced. “G is supposed to enable E and S. But in practice, it often hinders them,” said Peshawaria. According to his research, 60% of boardroom time is spent on financial management, risk mitigation and compli ance. That leaves little space for creative thinking or values-driven leadership. “What we need is innovation – new EXVLQHVV PRGHOV WKDW SUR¿W IURP VROYLQJ today’s human problems,” he said. In other words, to create genuine impact, companies must move beyond box-ticking and reimagine why they exist LQ WKH ¿UVW SODFH From compliance to commitment So, what does a better future look like? Peshawaria believes it begins with “steward leadership” – a concept built on ¿YH FRUH YDOXHV • Interdependence: Recognising the interconnectedness of all stakeholders. • Long-term view: Creating sustained value for both current and future gen erations. • Ownership mentality: Taking responsibility for environmental and social outcomes. • Creative resilience: Persisting in WKH IDFH RI GLVUXSWLRQ WR ¿QG LQQRYDWLYH solutions. • Ethical integrity: Doing the right thing, even when laws are silent. “These values aren’t just abstract ideals. “They are practical tools that help lead ers make better decisions – decisions that EHQH¿W ERWK EXVLQHVV DQG VRFLHW\ ´ KH VDLG Peshawaria’s team studied hundreds of companies that were thriving while tackling major global challenges. The common thread was stewardship.

• 85% of Malaysian public-listed com panies issue sustainability reports. • Only 46% include measurable ESG performance indicators. • Malaysia ranks 61st on Yale’s 2024 Environmental Performance Index. • 73% of Malaysians say they prefer buying from sustainable brands (NielsenIQ, 2023). • Over 850 ESG reporting frameworks exist globally – no universal standard. Fast facts: ESG in Malaysia That starts when businesses stop ask ing, “How do we report this?” and start asking, “What kind of future are we help ing to build?” checklist. It must become a vehicle for solving climate change, inequality and digital risk in meaningful, measurable ways. Only companies that make a positive GL̆ HUHQFH ZLOO VXUYLYH DQG WKULYH ´ VDLG Peshawaria. How Malaysians can play their part While the burden of responsibility lies with companies and regulators, ordinary Malaysians are not powerless. A VN GL̇ FXOW TXHVWLRQV 6XSSRUW EXVL nesses that are transparent about their practices. Push for clarity, not just colour ful claims. Investors, too, can demand account DELOLW\ ± E\ H[DPLQLQJ KRZ IXQGV GH¿QH VXVWDLQDELOLW\ DQG ZKHWKHU WKRVH GH¿QL tions translate into real-world impact. Above all, stay sceptical of sustainability spin. What ESG could be – if we let it For now, ESG remains a broken promise. But it does not have to stay that way. With stewardship leadership, compa nies can rediscover the heart of sustain ability – not as a regulatory hurdle, but as a moral compass guiding long-term value creation. “It is not about doing less harm. “It is about doing more good, on pur pose,” said Peshawaria.

Consumers play a role by demanding transparency and holding companies accountable for sustainability claims.

The key takeaway? Instead of more rules and metrics, we need more aware ness, skill-building and mindset shifts – starting from the boardroom. Why ESG needs to evolve As transparency becomes the norm, com SDQLHV ZLOO ¿QG LW KDUGHU WR KLGH EHKLQG buzzwords. Consumers, investors and regulators are all demanding proof of real impact. According to a 2023 NielsenIQ study, 73% of Malaysian consumers say they prefer to buy from sustainable brands. But more than half admit they are unsure how to verify if those brands are truly sustainable. This disconnect between intention and information opens the door for change. “In the future, ESG cannot remain a

“They didn’t wait for regulation. They led with purpose,” he said. Malaysia’s quiet success in governance education Interestingly, Malaysia has already taken a step in this direction – though perhaps without much fanfare. Over 15 years ago, Bank Negara Malay sia introduced the Financial Institutions Directors Education programme, making LW PDQGDWRU\ IRU DOO ¿QDQFLDO VHFWRU ERDUG directors to undergo corporate governance training. “The programme has significantly improved the quality of governance within RXU ¿QDQFLDO V\VWHP “It proves that behaviour change is possible when you invest in the right kind of education,” said Peshawaria.

Five warning signs of greenwashing

• Vague claims: Buzzwords like “eco friendly” without specifics or data. • Cherry-picked successes: Highlight ing one green initiative while ignoring broader impacts. • No third-party audits: Self-reported achievements with no independent verification. • Oversized marketing: More effort on promoting sustainability than practising it. • Confusing metrics: Using obscure benchmarks that make comparison impossible.

Companies are increasingly using ESG initiatives as marketing tools rather than creating meaningful impact.