Bursa Malaysia Annual Report 2015

FROM THE BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Bursa Malaysia •

Annual Report 2015

BUILDING A SUSTAINABLE CORE

As stated in my introduction, Bursa Malaysia has embarked on a concerted

programme to broaden and deepen our sustainability journey to become

more inclusive. The past year saw us implement a number of initiatives

designed to build greater resilience in our markets including:

•

Following the launch of the FTSE4Good Bursa Malaysia Index,

the

Exchange conducted initial research and engagement programmes

with the top 200 companies (in terms of market capitalisation)

to evaluate their potential admission into the FTSE4Good Bursa

Malaysia Index. The Index is reviewed twice yearly in June and

December. Following the December 2015 review, the constituents of

the Index increased to 34 from 25, which demonstrates a significant

improvement in Malaysian companies’ environmental, social and

governance (“ESG”) performance. The increase also reflects greater

recognition of and better adherence to higher sustainability disclosure

by our Public Listed Companies (“PLCs”).

•

The

Bursa

Malaysia

ASEAN

Capital

Market

CEO

Summit 2015 (“ASEAN CAP10”) Sustainability Series:

As part of the Exchange’s commitment to moving the sustainability

agenda forward, the Exchange developed the ASEAN CAP10

Sustainability Series which included two key events in 2015, namely

the Global Sustainability and Impact Investing Forum in July and

the Sustainability Symposium in October. These events served as

platforms gathering some of the best minds together to discuss issues

related to regional sustainability, building awareness and creating

conversations between the various stakeholders on both local and

global issues.

•

Signing the United Nation’s Sustainable Stock Exchanges

(“UN SSE”) Initiative commitment:

Bursa Malaysia made a formal

commitment to promote sustainability performance and transparency in

its capital market by becoming a signatory to the UN SSE’s sustainability

initiative. In doing so, Bursa Malaysia committed itself to prioritising

sustainability and to introducing global best practices into the Malaysian

market. In addition, Bursa Malaysia is also a part of the World Federation

of Exchanges’ Sustainability Working Group.

•

New Sustainability Framework:

We are driving the sustainability

agenda among our PLCs through the launch of a new sustainability

framework in October 2015. The framework made amendments to

the Listing Requirements, and saw the issuance of a sustainability

reporting guide and sustainability toolkits to our PLCs. The framework,

developed following a series of interviews and focus group sessions

with key stakeholders, requires our PLCs to consider their EES impacts

in greater depth, assess EES risks and opportunities that are material

to them and their stakeholders, and to better identify and engage their

key stakeholders.

In addition to the new PLCs listed under the FTSE4Good Bursa Malaysia

Index, I am pleased to note that Malaysian PLCs as a whole have been

excellent sustainability standard bearers for our marketplace after having

been recognised in regional sustainability awards. For example, three

of our PLCs, including Bursa Malaysia, placed in the Top 100 of Channel

NewsAsia’s Sustainability Ranking 2015. Also, the fact that Bursa Malaysia

ranked higher than its listed peers in the survey is further encouragement

that we as an organisation are on the right track.

The collective efforts of both Bursa Malaysia and its PLCs to improve

corporate governance have also shown results. In its Corporate Governance

Watch 2014 survey, the Asian Corporate Governance Association placed

Malaysia fourth in the overall rankings. At the same time, Malaysia is the

only market that has consistently edged up in scoring in every subsequent

survey since its start in 2007. The results of the ASEAN CG Scorecard also

show that the transparency practices of Malaysian PLCs are improving

based on their scoring in the Transparency Index.

We subscribe to the principle that good sustainable practice translates into

good business not only in terms of making organisations more resilient, but

also in terms of giving them a sharper competitive edge, especially in view of

the increasing interconnectedness of markets. At present, the overall market

for sustainable investment in Asia is robust and continues to grow, increasing

to USD53 billion at the start of 2014 from USD40 billion at the start of 2012

in the 13 markets where data was collected.

CHAIRMAN’S LETTER

TO SHAREHOLDERS

of Channel NewsAsia’s Sustainability Ranking 2015

in the overall rankings

TOP 100

MALAYSIA 4

Awarded

Asian Corporate Governance Association