The Malaysian Reserve Thursday, April 29th, 2021

Sustainable labour practices are expected to be a pressing issue post-pandemic as the global economic reset will be focused on income inequality by ALIFAH ZAINUDDIN

RECENT concerns over the treatment of workers in Malaysia have put the spotlight on some of the country’s biggest companies and put pressure on management to show they are taking more responsibility for how they generate their profits as more institutional investors factor in environmental, social and governance (ESG) risk into their decision-making. The world’s largest glovemaker, Top Glove Corp Bhd, is already under intense scrutiny after a surge in Covid-19 cases at its facilities revealed poor housing conditions for its migrant labour force amid allegations of overtime work. The company’s share price has come under selling pressure, falling sharply from its October high of RM9.60 to RM6.64 at close last Friday, after more than 5,000 of its workers tested positive for the coronavirus with one reported dead. The Employees Provident Fund has been trimming its stake in the glove manufacturer since end of November, paring down its stake to 423.09 million shares or 5.28% as of Dec 18, compared to 534.31 million shares or 6.64% stake on Nov 20. Last week alone, it reported the sale of some 24.39 million shares, Bursa filings showed. AxiCorp Financial Services Pte Ltd chief global market strategist Stephen Innes expected sustainable labour practices to be a pressing issue post-pandemic as the global economic reset will be focused on income inequality. “There will be negative backlashes due to the greening of the planet, but even more so after the latest health and labour issues were brought to the fore when Malaysia’s rubber gloves shipments were banned into the US due to forced labour. “I think this will turn investors off from any products manufactured by rubber if the labour and environmental issues are not resolved,” he told The Malaysian Reserve (TMR). Rival glovemakers Hartalega Holdings Bhd and Kossan Rubber Industries Bhd have also seen their share prices dropping over the same period after both companies confirmed that hundreds of their workforce combined tested positive for Covid-19. RAM Sustainability Sdn Bhd head of sustainability services Gladys Chua said there are various facets to be considered when investment decisions are made, with different investors having varying risk appetites. “However, ESG is gaining prominence in the investment decision-making process in Malaysia, especially among large institutional investors, where they are paying more attention to industries that are of higher ESG risk. As ESG investing comes to the fore, companies in these vulnerable sectors will have to improve on their weaknesses in order to maintain investor interest in the long run,” she told TMR. Apart from the glove manufacturing industry, other sectors including construction and plantation, are also suffering similar fates. Palm oil giant FGV Holdings Bhd has seen its products being blocked from entering the US over forced labour claims. The US Customs Border Protection (CBP) restricted FGV’s products in September on allegations of forced and child labour. FGV, however, has denied the claims saying it has taken steps to improve its foreign labour recruitment system. It was last reported that the CBP would consider lifting the restrictions imposed on FGV and revoke the import ban after clarifications were made via a conference call on Oct 8.

In your opinion what are the issues that the stakeholders increasingly concerned with and why do you think that the stakeholders increasingly concerned with the issues? As a CEO of the companies, how you might respond to the information provided within the article?