ENVIRONMENTAL , Social and Governance (ESG) adoption should be seen as an opportunity to strengthen business competitiveness and future-proof companies, rather than an added burden, says state Trade and National Unity Committee chairman Goh Choon Aik.
Speaking at the “Accelerating ESG Adoption: Policies, Strategies, Grants” programme organised by the Penang Chinese Chamber of Commerce (PCCC), Goh said ESG has evolved from a corporate responsibility into a business necessity amid rising expectations from investors, multinational corporations (MNCs) and global markets.
“Today, international companies are looking beyond price, quality and delivery. They are also assessing how sustainable a business is, how responsibly it operates, how it manages its energy consumption and carbon footprint, how it treats its workers, and how transparent its governance practices are.
“These factors are increasingly influencing investment decisions, procurement, financing and access to global markets. That’s why ESG readiness must become part of our economic competitiveness strategy,” he said.
Goh said the issue is especially relevant to Penang, an internationally recognised manufacturing, electronics and services hub with strong links to global supply chains.
He noted that Penang is home to about 350 MNCs, supported by thousands of small and medium enterprises (SMEs) within their supply chains.
“As multinational corporations place greater emphasis on ESG requirements, local companies can no longer rely solely on their technical capabilities or production capacity.
“When evaluating potential vendors and suppliers, many MNCs also assess whether businesses comply with ESG standards and demonstrate responsible practices,” he said.
Goh said ESG is often misunderstood as focusing solely on environmental issues, when it also covers social and governance considerations.
He said the social component includes workplace conditions, employee welfare, labour practices and the treatment of workers, including foreign employees.
Acknowledging the challenges faced by SMEs, Goh said many businesses remain unsure of where to begin, which standards to adopt and the costs involved.
He encouraged companies to start with practical measures such as improving energy efficiency, reducing waste, strengthening workplace practices and setting measurable ESG targets.
“For SMEs, the approach should be simple – start small, measure properly and improve continuously. The goal is not to become perfect overnight but to become better every year,” he said.
Goh also highlighted financing as a key concern, noting that ESG reporting and compliance requirements could cost up to RM100,000.
“Government agencies, financial institutions and industry organisations all have a role to play in helping businesses access grants, incentives, financing facilities, consultancy services and training programmes related to ESG.
“It is equally important that these support mechanisms are easy to understand and accessible so that more companies can begin their ESG transition,” he added.
He stressed that ESG is ultimately about building businesses that are not only profitable today but also resilient and trusted in the future.
“The most important outcome is action. ESG adoption does not happen through policy statements alone. It happens when businesses take practical steps to improve their operations and prepare themselves for future opportunities,” he said.
PCCC president Datuk Seri Choot Ewe Seng said ESG is no longer merely a corporate trend or reporting exercise, but a fundamental requirement for businesses seeking to remain competitive internationally.
He added that the chamber will continue organising programmes on sustainability, digital transformation, artificial intelligence (AI), productivity enhancement and international market opportunities.
Story by Edmund Lee
Pix by Law Suun Ting