Business partnership leader gather to nurture young seedling plant with ESG icons, symbolizing corporate unity commitment to environmental protection and natural preservation.

Environmental, Social and Governance has become a strategic imperative

In today’s global landscape, sustainability has evolved from a trendy buzzword into an indispensable component of corporate strategy. As challenges such as climate change, social inequality and the demand for corporate transparency rise to the forefront, property developers are under increasing pressure to adapt. No longer can sustainability be viewed as an optional initiative - it has become a strategic imperative. Developers who fail to incorporate Environmental, Social and Governance (ESG) practices into their operations risk falling behind, both in reputation and in long-term profitability.

Environmental responsibility: A visible priority

Environmental responsibility is perhaps the most tangible and pressing element of the ESG framework. The effects of climate change, resource depletion and environmental degradation are no longer distant threats; they are unfolding before our eyes. The call for businesses to mitigate their environmental impact has become a global demand, driven by consumers, investors and regulators alike.

Property developers are now expected to lead the charge toward a greener future. This means actively reducing their carbon footprint, conserving natural resources and embedding eco-friendly practices throughout their operations. Beyond regulatory compliance, this commitment to sustainability also serves as a competitive edge. Consumers today are more environmentally conscious than ever before and developers who prioritise sustainability are more likely to appeal to this growing market.

By integrating features such as energy-efficient designs, green buildings and renewable energy sources like solar power, developers are not only reducing their environmental impact but also increasing the market value and attractiveness of their projects. For example, eco-friendly innovations like rainwater harvesting systems, smart water management and electric vehicle (EV) charging stations demonstrate a forward-thinking approach to sustainability that resonates with modern homebuyers and tenants.

Social responsibility: Building stronger communities

The S in ESG, social responsibility, has also gained significant prominence in recent years. The global pandemic and movements for social justice have highlighted the need for companies to take a stand on social issues. Property developers, in particular, have a unique role to play in shaping the communities they build.

A developer’s commitment to social responsibility extends beyond the physical structures they create. It involves fostering inclusive, diverse communities that prioritise the well-being of all residents. This can be achieved through community engagement programs, ethical labour practices and efforts to ensure equitable access to amenities such as public transport, healthcare and education. Developments that offer safe, accessible spaces, health-conscious environments and services like covered walkways and free shuttle services not only contribute to the community’s quality of life but also bolster the developer’s reputation.

In addition, property developers are increasingly expected to champion social causes, such as diversity in the workplace, fair wages and ethical supply chain management. Those that invest in these areas are better equipped to navigate societal shifts and build resilient, sustainable brands that can thrive in the face of change.

Governance: The backbone of sustainability

Governance is the foundation that holds a company’s sustainability efforts together. Stakeholders and shareholders demand transparency, accountability and ethical decision-making from the companies they invest in. Strong corporate governance ensures that these expectations are met, protecting both shareholder interests and the company’s long-term viability.

For property developers, this means implementing robust governance structures that emphasise high standards of integrity, anti-corruption measures and compliance with local and international regulations. Effective governance also plays a critical role in risk management, helping companies navigate regulatory changes and market volatility.

Companies with sound governance practices are better equipped to deliver on their ESG commitments. They are more resilient in the face of challenges, from economic downturns to environmental disasters and can better sustain long-term growth.

A strategic imperative for developers

Emphasising ESG principles is no longer just about corporate social responsibility - it is a strategic imperative for long-term success. The importance of ESG is being recognised globally and Malaysia is no exception. In fact, ESG criteria in the Malaysia Developer Awards have been elevated, with ESG now accounting for 30% of the total evaluation. This shift underscores the importance of integrating sustainable practices into every facet of property development.

Key ESG criteria include a comprehensive sustainability plan and policy that demonstrates how the developer is responding to ESG challenges. This plan must detail specific initiatives, such as:

• Environmental concerns: Incorporating green building standards, designing EV-friendly infrastructure, preserving local biodiversity and utilising smart water systems that recycle rainwater or treat wastewater for reuse.
• Social priorities: Promoting community well-being through health and safety initiatives, ensuring access to efficient public transport and engaging in charitable activities or offering public services like shuttle buses.
• Governance measures: Implementing strong integrity policies, anti-corruption measures and ensuring compliance with standards like the FTSE4Good Bursa Malaysia (F4GBM) Index.

Furthermore, developers must showcase their commitment to achieving a carbon-free footprint, aligning with global efforts to mitigate climate change. The United Nations’ 17 Sustainable Development Goals (SDGs) serve as a guiding framework for these initiatives, helping developers measure the impact and benefits they generate for various stakeholders—residents, employees, communities, partners and the wider industry.

Incorporating ESG into property development is no longer a choice; it is a necessity. Developers who embrace sustainability are not only safeguarding their businesses against future risks but also unlocking new opportunities for growth, innovation and community impact. By focusing on environmental responsibility, social equity and sound governance, property developers can build a future that is both prosperous and sustainable - for their companies, their stakeholders and the planet.

In this new era of development, the path to success is clear: those who integrate ESG principles into their core strategy will thrive, while those who do not risk being left behind.

TOTC qualitative rankings - ESG

In the RM1bil and above category, SP Setia Bhd emerged as the clear leader in rankings, scoring  25.3 points out of 30. In the below RM1bil, Paramount Corporation Bhd took the top spot with 24 points out of 30. 

Companies that integrate ESG principles into their core operations are poised to thrive in today’s rapidly changing business landscape. Far from being a mere box to tick, ESG serves as a dynamic engine for growth, innovation and resilience. By embracing environmental stewardship, social responsibility and sound governance, these companies attract forward-thinking investors and build lasting customer loyalty.

Success in the modern world is no longer measured solely by financial profits. As global priorities shift, businesses that commit to ESG are proving they can balance profitability with purpose. They are not just adapting to change—they are shaping the future. In this evolving landscape, companies that prioritise ESG will lead the way, setting the standards for sustainable growth and long-term success.

Ranking by ESG