THE IMPORTANCE OF ESG IN THE TIMBER INDUSTRY

In businesses’ landscape today, sustainable development increasingly becoming fundamental due to the shift in recognition of the importance of UN Sustainable Development Goals (SDG) and Environmental, Social and Governance (ESG) practices in achieving long-term success and attracting business investment. Hence, ESG serves as a framework used by investors and businesses to evaluate the sustainability and ethical impact of investments or business practices.

• Environmental (E): This aspect focuses on how a company's operations impact the environment. It includes considerations like carbon emissions, waste management, energy efficiency, and natural resource conservation. Companies with strong environmental practices aim to minimize their negative impact on the environment and often invest in renewable energy, sustainable sourcing, and eco-friendly technologies.

• Social (S): The social dimension of ESG deals with how a company manages its relationships with employees, suppliers, customers, and the communities in which it operates. It encompasses issues such as labor practices, human rights, diversity and inclusion, product safety, community engagement, and Companies with strong social policies prioritize fair labor practices, diversity in the workplace, and community development initiatives.

• Governance (G): Governance refers to the systems and processes that guide the decision-making and oversight within a company. It includes aspects such as corporate governance structures, executive compensation, board diversity, shareholder rights, transparency, and ethical business conduct. Strong governance practices ensure accountability, integrity, and responsible management of shareholder In many countries and jurisdictions, sustainability reports are prepared and published by companies to communicate their ESG performance.

 

As the global businesses facing increasing pressure to incorporate sustainability practices into their business operation and practices, governments are taking proactive measures to educate ESG Reporting or better known as Sustainability Reporting. Thus, businesses in Malaysia are seeing an increase in ESG reporting requirement and regulations, not just for listed companies, but also to give awareness towards SMEs. The awareness on ESG and its Sustainability Reporting peaked when Bursa Malaysia mandated for all public listed companies to disclose their sustainability reporting by 2025 for the Main Market and 2026 for the ACE Market. Pursuant to this, MTIB have organised seminars from 2022-2024 to increase awareness on ESG principles and conducted a brief survey on level of awareness on ESG and ESG Reporting in the timber industry. From the feedback received from the participants and survey respondents, MTIB has developed a ‘Manual for ESG Reporting’ in order to provide general guidance on the types of metrics that organisations should consider measuring within each topic area (environmental, social and governance) for the timber industry especially small and medium enterprises.

 Click HERE on the ESG Reporting Work Manual for more information.

Please contact the following officers for further details:

Puan Norhaizurah binti Zulkarngain (norhaizurah[at]mtib[dot]gov[dot]my)
Cik Rohayu binti Che Lope (rohayu[at]mtib[dot]gov[dot]my)
Tel : 03 - 9282 2235 (extension : 1380 / 2019)

 

Last Updated: 12 August 2025