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FRAMEWORK OF CORPORATE SOCIAL RESPONSIBILITY
- Bursa Malaysia main Market Listing Requirement
The Bursa Malaysia CSR Framework is a framework that only explains the fact of having a corporate social responsibility in annual report. Under the Bursa Malaysia Securities Berhad Main Market Listing Requirements amended 2006 have stated that CSR is mandatory for public listed companies. The company must disclose the corporate responsibility activities and events that the company has done throughout the year in a report. Failure to that, fine are attributable.
As cited by Best Business Practice Circular 5/2013 Corporate Responsibility : Guidance to disclose and Reporting, by Companies Commission of Malaysia(Suruhanjaya Syarikat Malaysia (Companies Commission of Malaysia), 2013), under Listing Requirement, Chapter 9, paragraph 9.25 (1) has stated that “A listed issuer must set out separately in its annual report, the items set out in Part A of Appendix 9C”. While Part A of Appendix 9C (para 29) stated that “A description of the corporate social responsibility activities or practices undertaken by the listed issuer and its subsidiaries or if there are none a statement to that effect”. Above listing requirements means that the SCR has become mandatory to public listed companies. Chapter 16 paragraph 16.19(1)(a)(iv) of Listing Requirement has stated that for non compliance to the listing requirements for CSR, “Without prejudice to any of the powers granted to the Exchange under the written law in relation to the enforcement of these Requirements, the types of action or penalty that the Exchange may take or impose for a breach of these requirements include any one or more of the following: (iv) imposition of a fine not exceeding RM 1 million.”
Bursa Malaysia has outlined the Listing Requirement for CSR, but there is no standard provided in terms of to what extend that the company must disclose. However, the Bursa Malaysia CSR Framework provides the 4 areas of practice that can be used by listed companies in presenting their CSR(Bursa Malaysia, 2010). They are:
- The Environment
- The Community
- The Marketplace
- The Workplace
These 4 areas may not be attributable to all listed companies since the application must be interrelated with the industry itself and the nature of the business. Thus, not all companies might present the 4 areas in their CSR. In fact, the company must identify their business nature and the activities suitable with any of the areas. For non related area which does not exist in their business activities and does not in line with their activities, the company must provide further explanation why they do not have the areas in their CSR.
In conclusion, this CSR framework for Malaysian Public Listed Companies is just a framework to help listed companies in reporting CSR in their annual report as part of the listing requirements. The framework also provides a guideline on what the listed companies should disclose in the CSR. Thus, the company must come out with their own initiative on what to present in their annual report according to the 4 key areas provided by Bursa Malaysia.
- Best Business Practice Circular 5/2013 Corporate Responsibility : Guidance to disclose and Reporting, by Companies Commission of Malaysia
The Best Business Practice Circular 5/2013 outlines the best practices guideline for Corporate Responsibility in the disclosure and reporting. This framework is established by Companies Commission of Malaysia. The basic focal areas outlined under this circular is basically same as stated under Bursa Malaysia but it provides a better understanding and further explanation on each of the area. On top of that, the circular also has highlighted on some issues that need to be considered in providing the best medium of CSR disclosure, for example the product and packaging, the stand alone website and etc.
The circular may be followed in order to obtain a full context of CSR reporting and the disclosures that meet the users’ expectation and gaining their trust on how well the company is managing the resources and at the same time is able to sustain the social responsibility.
We believe that it is mandatory for companies to have CSR in their annual report. The company can use the 4 focal areas. However, in order to have the best practices in presenting the CSR report, the circular by CCM would be the best guidance for them. As to put it in words, the company must ensure that they can differentiate between the key areas that suit their business nature and activities. Other than that, they must ensure that they meet the expectation of the users of the annual report and provide sustainability to the business in taking care of their social responsibility. By having this, we believe that the public and investors’ trust are easily obtained.
BURSA MALAYSIA CSR FRAMEWORK: 4 AREAS OF PRACTICE
In comparing the corporate social responsibility (CSR) practices in public listed companies in Malaysia, we chose two well known telecommunication corporations, which are Telekom Malaysia Berhad (Telekom Malaysia Berhad, 2013) and Maxis Berhad (Maxis Berhad, 2013). As explained earlier, there are four main focal areas outlined by Bursa Malaysia for CSR practices.
- The Environment
Maxis Berhad adopts various energy efficiency solutions at most of their base stations and technical operation centres. Among the examples of the solutions include solar technology, free cooling systems and energy efficient air-conditioners. Apart from that, Maxis also exercises a good carbon management with the aim to reduce direct and indirect carbon dioxide emissions. The goal is achieved through several initiatives, including the modernisation of old Base Transceiver Stations (BTS). They are also continuously upgrading old air-conditioning units to those that are more energy efficient.
As for Telekom Malaysia Berhad, they have their own environmental campaign called BumiKu. It highlights on five crucial elements of the environment which are air, energy, water, earth and humans. By having such categories, it shows that they concern about the environment from all angles possible, not only on certain areas. Apart from that, they also conduct several environmental awareness programs which involve the employees and the public. Among the activities include camping and gotong royong.
In conclusion, there is a different focus of corporate social responsibility provided by both corporations in terms of taking care of the environment. Maxis Berhad is exercising the environmental friendly activities in their day to day operations whereas Telekom Malaysia Berhad is more towards organizing activities that involve interactions of their employees and the public with the environment.
- The Community
Maxis has conducted several activities that serve the community. Maxis Cyberkids Camps for example, is a program that opens up the world of technology and the Internet to youth, nationwide. Other than that, Maxis also provides scholarships to the well performing students among customers and their children. This has helped a lot of young Malaysians to further their education at prestigious universities both at home and abroad. Apart from that, the corporation also adopted few welfare homes to see how they can help them in terms of overcoming IT illiteracy. The home adoption has benefited the people through trainings that developed their social and IT skills.
As for Telekom Malaysia Berhad, they also focus more on the education, which allows the youth to get out from poverty as well as empowering the underprivileged to improve their lives and the lives within their community. Among the well known education centres owned are Multimedia University and Yayasan Telekom Malaysia. Other than the youth, the corporation also served the other members of the communities, for example single mothers, through their program called Program Sejahtera. The program aims to encourage the women to be financially independent through entrepreneurship workshops where they are exposed to networking and business opportunities. Telekom Malaysia Berhad also has taken an effort in supporting the government initiatives by entering into a partnership with the government to roll out high speed broadband infrastructure and services in Malaysia. Other beneficial community services include donations and bridging the digital divide.
In a nutshell, in serving the community, both Maxis Berhad and Telekom Berhad seem to focus more on the education as they conducted a lot of knowledge gained programs. This may be due to the nature of their business which involves technology that serves young people more. However, that does not mean that they forget to serve the other community members.
- The Marketplace
In terms of the marketplace under Corporate Social Responsibility (CSR) practices, companies usually disclose their responsibilities towards the stakeholders by complying with the professional standards and processes. It basically demands the company to be honest, open and ethical in all of their interactions. The scope is to disclose the way the companies interact with their important stakeholders such as shareholders, suppliers, and customers.
As we compare between Telekom Malaysia Berhad (TM) and Maxis Berhad (Maxis), both of the companies had disclosed their responsibilities to operate ethically towards their stakeholders. However, in terms of the details of information disclosed, TM had presented more information as compared to Maxis. TM had listed out all the programs, activities and strategies that the company has conducted in order to serve their stakeholders better and ethically.
TM established their leadership in the marketplace by engaging in ethical procurement practices, serving their customers with the highest quality products and services, ensuring at all times communication channels open with their stakeholders and assuring the continuity of their services by restraining activities that could disrupt the business. For example, in engaging ethical procurement practices, TM embedded sustainability into the supply chain by setting clear expectations through their Supplier Code of Conduct and holding any key suppliers accountable through their business scorecard. Example of efforts that TM showed in order to provide their customers with the highest quality products and services, a Quality Management Systems was introduced which involve a gated process that govern the entire product life cycle from its conceptualization to its marketing and installation in customers’ premises.
Unfortunately for Maxis, the company only stated generally their responsibility to comply with the “Code of Business Practice”, which guides Board members, management and employees in upholding the highest standards of ethical business conduct. Maxis ensures that the highest standards of conduct should always be essential for the company. There were no details on the activities and programs conducted in enhancing their marketplace provided in CSR. This is probably because they had disclosed it in the other part of their annual report.
- The Workplace
As for the workplace, the companies usually make known to the public about the values that the companies hold dearly such as the quality of work environment and the health & safety of the employees. According to the comparisons that we made, both TM and Maxis have disclosed how and to what extent the company ensures their workplace to be excellent in performance. In spite of this, same as the disclosure in the marketplace area, TM has revealed more information regarding the programs and activities that they conducted in order to recognize the values that they embraced in the workplace.
TM stated in the annual report that they recognized their employees to be their most valuable assets, hence they are committed to create a working environment that attracts the best talent and inspires the employees to realize their true potential. TM also developed a spirit of 1TM to encourage teamwork and created a true sense of belonging to the organization. One of the efforts that TM initiated in the company is the participation of their employees as TM ROVers. This TM ROVers were encouraged to suggest and undertake their own community outreach and environmental activities, in addition to participating in TM-organized programs.
On the other hand, Maxis only disclosed their responsibility in the workplace area in one column titled “Engaging Our People”. This column only asserted generally that Maxis would go beyond the initiatives of corporate responsibility. The statement is referring to the opportunities provided by Maxis for their staffs to be more multitasking and expert in what they do. The details of the activities for enhancing the workplace would probably be disclosed in the other part of the annual report. For example, until the latest annual report, there have been 439 Maxis volunteers participating in community programs.
Suruhanjaya Syarikat Malaysia (Companies Commission of Malaysia). (2013). BEST BUSINESS PRACTICE CIRCULAR 5/2013 Corporate Responsibility : Guidance to Disclosure and Reporting (Vol. 5, pp. 1-24). Kuala Lumpur: Suruhanjaya Syarikat Malaysia (Companies Commission of Malaysia).