• MSM has implemented holistic ESG initiatives, covering Enviromental,  Social & Human Rights, Governance, Economic Growth, and Innovation and Transformation as its sustainability approach.

• The group embarked on sustainability initiatives to retain its efforts over  the years, broadly supporting the 15 key materiality on UN Sustainable  Development Goals (SDGs) and its commitment towards Science-Based  Target Initiatives and Net-Zero to reduce emissions by 45% by 2030.

• According to management, MSM has allocated a budget of RM34mn for  ESG initiatives since 2022, working in conjunction with the ESG committee.  We expect these numbers to rise as the group further commit and  implement various ESG efforts and initiatives going forward.

• We have assigned MSM an overall ESG rating of 3.9 out of 5 which falls in  the rating band of “Good”.

• MSM remains a BUY with unchanged TP of RM0.95.

Summary

MSM has implemented a robust ESG initiatives, aligning with 15 UN SDGs, to  address significant material matters and enhance sustainability in the  challenging sugar refining industry. This demonstrates their commitment to  social responsibility and structured governance, fostering confidence in their  ongoing sustainability efforts and adding value for shareholders.

MSM’s ESG Evolution Journey

MSM Malaysia Holdings Berhad (MSM) places strong emphasis on  environmental, social, and governance (ESG) focus, including economic  growth, innovation and transformation, as well as environmental, social, and  governance materiality. The Group Sustainability Policy (GSP) which was introduced in 2018 covers 18 points that address MSM’s commitment - i)  meeting the requirements of all applicable legislations and regulatory rules, ii)  engaging with stakeholders to promote sustainability practices, and iii)  assisting external suppliers to comply with the GSP policy.

The group embarked on sustainability initiatives to retain its efforts over the years, broadly supporting the 15 key materiality on UN Sustainable  Development Goals (SDGs) and its commitment to reduce emissions by 45% by  2030 and having the recognition from Science Based Target Initiative (SBTi) as  second food-based company in Malaysia. This indicates its commitment to  sustainable and responsible business practices. With an improved FTSE Russell  rating over the years, from 1 star in 2021 to 2.4 stars in 2022, MSM has  demonstrated its commitment to improve sustainable and responsible  business practices.

Moving forward, the establishment of ESG Committee is expected to have  several significant impacts on the group's efforts including i) enhanced focus  and governance, ii) establishment of comprehensive ESG plans/strategy, iii)  effective risk management, iv) improve stakeholder engagement, and v)  continuous improvement and reporting, hence positively influencing its  scoring.

Source: BIMB Securities Research - 12 May 2023