ESGm rating

ESG investing, also known as sustainable investing is a term that is frequently used for investing in a good company that implemented excellent management in Environment, Social and Governance.

Environment

Environmental criteria addresses a company’s operations environmental impact, and environmental stewardship. The factors include the contribution of a company or government to greenhouse gas, emissions, biodiversity, water, waste and effluent management, energy efficiency, renewable energy, supply chain, product and services responsibility and compliance. Giving a credit for improved efforts to combat global warming, cutting emissions and decarbonizing which becomes more important.

Social

Social criteria refers to how a company manages relationships and creates values for stakeholders. Social terms include occupational safety and health, labor practices, society (community), society (employee), product and services responsibility, and supply chain (supplier). A social score also rises if a company is well-integrated with its local community and therefore has a social license to operate with consent.

Governance

Governance criteria refers to a company’s leadership and management philosophy, practices, policies, internal controls, and shareholder rights. Governance refers to a set of rules or principles defining rights, responsibilities, and expectations between different stakeholders in the governance of corporations. A well-defined corporate governance system can balance or align interests between stakeholders and work as a tool to support a company’s long-term strategy.

Maqasid Shariah

Maqasid Shariah criteria refers to the criteria that needs to be considered as an added value for Muslim investors to choose the company to invest. It includes utilization of an asset, responsibility to pay zakat, controversy score, lower percentage of business activity and financial ratios that are related to non-shariah compliance elements. Security Commission Malaysia has established the Shariah status for Bursa listed company. iSaham established financial ratios and business screening criteria in Maqasid score for showing the lower the percentage of a non-shariah element, the better it is to be chosen by Muslims to invest. Maqasid score gives an added value that needs to be reconsidered by Muslims other than the ESG criteria.