Muhammad Zahid Haseeb Ur Rehman and Muhammad Anees Khan

Abstract

The aims of the current study were to investigate the regulatory factors recommended by the
Malaysian Code on Corporate Governance (MCCG) 2012 for the improvement of environmental,
social, and governance (ESG) practices. The study employed ESG index based on GRI framework for
data collection from 878 Malaysian public listed companies for three years from 2011 to 2013. The
results showed that there is a significant slight improvement in the level of ESG practices in Malaysian
public listed companies over time. In addition, the study revealed that MCCG 2012 and its
recommendation for increasing the quota of women directors on the board and top management
commitment have a significant role in improving the level of ESG practices in Malaysian public listed
companies. The overall results suggested that regulatory reforms matter for implementing ESG
practices. The findings of the study have important insight for the regulatory bodies of Malaysia in
order to improve the level of ESG practices in the corporate sector and step ahead towards
sustainable industrialization.