28-07-2025
Room to improve in local inclusitivity standards
PETALING JAYA : Broader diversity, equity and inclusion (DEI) metrics such as ethnicity and disability remain overlooked in Malaysia, according to BIMB Research.
The research house, however, said that board-level gender diversity has improved, with more women taking up spots as directors of listed companies.
The improvement occurs as DEI is emerging as a strategic pillar within the 'social' component of environmental, social and governance (ESG) standards and is crucial for long-term value creation.
BIMB Research said in a report that institutional investors now view DEI as material to risk management, talent retention, and sustainable financing.
In an era where ESG performance has become a key determinant of long-term corporate resilience and investment attractiveness, DEI has emerged as vital, the research house said.
'For Malaysia – a fast-developing South-East Asian economy and an emerging-market investment hub – the strategic integration of DEI into corporate governance is no longer optional but essential.'
BIMB Research said the regulatory environment has gradually evolved, as demonstrated by the Malaysian Code on Corporate Governance and the Securities Commission's Corporate Governance Monitor.
These developments have led to improvements in gender parity on boards, equitable hiring practices, and inclusive workplace cultures, it said.
'For investors, DEI is not merely a social virtue – it is an emerging strategic lever for managing ESG risk and enhancing corporate sustainability,' it added.
DEI basically encompasses fair treatment, access, opportunity, and advancement for all people, while striving to identify and eliminate barriers that have prevented the full participation of some groups.
BIMB Research noted that, globally, ESG disclosure frameworks are evolving to include more rigorous DEI metrics.
It said the Sustainability Accounting Standards Board and Global Reporting Initiative all integrate DEI-related indicators, particularly those concerning gender balance, fair wages, equal opportunity policies, and anti-discrimination.
In response, stock exchanges and financial regulators – from the US Securities and Exchange Commission to the Hong Kong Stock Exchange – are now enforcing more stringent diversity.
'Malaysia is gradually aligning with these practices, and Bursa Malaysia's Sustainability Reporting Guide now encourages listed companies to adopt global best practices in DEI metrics.'
It added that Malaysia continues to build momentum in aligning with global DEI norms.
Malaysia's demographic diversity – comprising multiple ethnic, religious, and cultural groups – positions the country as a unique environment for developing inclusive DEI strategies, it said.
It noted that Malaysia's alignment with global DEI norms may influence its representation in sustainability indices such as the FTSE4Good Bursa Malaysia Index, which includes companies with strong ESG practices.
While DEI is not an explicit criterion for index inclusion, social sustainability factors such as labour standards, diversity policies, and stakeholder engagement are among those considered by FTSE Russell, BIMB Research added.
