Article Search By : Mr. Mohd Nasarudin Ismail, Internal Audit Division, UPM

Environmental, Social and Governance (ESG) has emerged as one of the most significant topics in the global business landscape, particularly in the post-pandemic era. As organisations increasingly embrace sustainable business practices, ESG has become a key consideration for investors, regulators, customers and other stakeholders in evaluating long-term business resilience and value creation.

At its core, ESG reflects an organisation’s commitment to conducting its operations ethically, responsibly and transparently. It encompasses not only environmental stewardship and social responsibility but also the governance framework that guides corporate decision-making and accountability. Effective ESG practices ensure that the interests of shareholders, employees, business partners, suppliers and the surrounding community are appropriately considered.

Among the three ESG pillars, governance remains a critical component in determining whether an organisation can genuinely be regarded as sustainable. Strong governance provides the foundation for ethical leadership, sound risk management, regulatory compliance and organisational integrity. Without these elements, sustainability initiatives may lose credibility and fail to achieve their intended impact.

Public Listed Companies (PLCs) are increasingly expected to address ESG-related risks that may affect their business operations and long-term performance. Failure to comply with ESG principles may expose organisations to reputational damage, diminished stakeholder confidence and reduced investor trust. Consequently, business practices must be guided by transparency, accountability and ethical conduct to ensure sustainable growth.

Good governance is built upon two equally important dimensions: individual integrity and corporate governance. Individual integrity refers to personal values such as honesty, responsibility and trustworthiness, while corporate governance focuses on the policies, structures and control mechanisms that ensure organisational accountability. Both dimensions must complement one another in creating an effective governance ecosystem.

To strengthen governance practices, organisations are encouraged to adopt recognised management frameworks and systems such as the Anti-Bribery Management System (ABMS), Organisational Anti-Corruption Plan (OACP) and Corruption Risk Management (CRM). These frameworks provide structured approaches to preventing misconduct, enhancing internal controls and promoting a culture of integrity throughout the organisation.

Governance and management systems are inherently interdependent. A robust management system alone is insufficient if employees fail to uphold ethical values, while relying solely on personal integrity without effective governance structures may create opportunities for misconduct and non-compliance. Sustainable organisational performance can only be achieved when both strong governance mechanisms and ethical organisational culture are embedded across all levels.

Therefore, integrity-driven corporate governance should serve as the cornerstone of every ESG strategy. Boards of Directors and management teams must ensure that anti-corruption measures, integrity principles and governance requirements are integrated into their decision-making processes and organisational policies.

Industry players are also encouraged to enhance their ESG implementation strategies by adopting internationally recognised standards such as ISO 37001:2016 Anti-Bribery Management Systems. Such initiatives not only establish a sustainable business framework but also reinforce organisational integrity, strengthen governance practices and build long-term stakeholder confidence.

Date of Input: 21/05/2026 | Updated: 22/06/2026 | muhammad.isam