Case study: How Bursa Malaysia promotes ethical business behaviour
Bursa Malaysia is an exchange holding company incorporated in 1976, operating a vibrant and diverse marketplace in ASEAN (Association of Southeast Asian Nations), which is one of the fastest growing economic regions in the world. As the Exchange, Bursa Malaysia is responsible for setting the right tone on ethics and integrity in the capital market ecosystem. To achieve this, Bursa Malaysia must embrace ethical practices as an integral part of its DNA, and fulfil its duties in an exemplary manner.
This case study is based on the 2019 Sustainability Report by Bursa Malaysia published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
One of Bursa Malaysia’s key priorities is to build and maintain a strong culture of anti-fraud, bribery and corruption Tweet This!, taking a zero-tolerance approach towards fraud, bribery and corruption and making sure that it is in compliance with all relevant laws, including anti-corruption laws. In order to promote ethical business behaviour Bursa Malaysia took action to:
- carry out corruption risk assessments
- strengthen due diligence
- establish a Corporate Integrity Task Force
- implement a ‘three lines of defence’ strategy
- apply a Whistleblower Policy and Procedures
- implement comprehensive policies and guidelines
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With this case study you will see:
- Which are the most important impacts (material issues) Bursa Malaysia has identified;
- How Bursa Malaysia proceeded with stakeholder engagement, and
- What actions were taken by Bursa Malaysia to promote ethical business behaviour
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What are the material issues the company has identified?
In its 2019 Sustainability Report Bursa Malaysia identified a range of material issues, such as economic performance, customer privacy, cyber security, climate change, employee diversity, inclusiveness and equal opportunity. Among these, promoting ethical business behaviour stands out as a key material issue for Bursa Malaysia.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups Bursa Malaysia engages with:
| Stakeholder Group | Method of engagement |
| PLCs or potential PLCs
| · Meetings · Public/industry consultations · Focus group sessions/ dialogues · Engagement through emails, phone calls, surveys or other means · Circulars/directives · Communication notes · Advocacy programmes and workshops · Promotional roadshows and seminars · Enquiries via Listing Advisory Portal · BursaLINK · Site visits · Bursa Malaysia websites |
| Investors
| · Meetings · Public consultations · Focus group sessions/ dialogues · Engagement through emails, phone calls, surveys or other means · Local and overseas conferences (e.g. Invest Malaysia), advocacy programmes and workshops · Promotional roadshows, seminars, workshops and webinars · Bursa Malaysia’s various digital touchpoints (websites, mobile apps) · Social media platforms (e.g. Twitter, Facebook, Instagram) |
| Intermediaries
| · Meetings/visits · Public/industry consultations · Focus group sessions/ dialogues · Securities Market Operations Committee (SMOC), Derivatives Market Operations Committee (DMOC), Technical Working Group (TWG) comprising members from the stockbroking industry/ derivatives/broking community/custodian banks · Engagement through emails, phone calls, surveys or other means · Circulars/directives · Communication notes · Advocacy programmes and workshops · Promotional roadshows and seminars · Bursa Malaysia websites · Bursa Malaysia Computer Emergency Response Team (BM-CERT) · Cyber Security Awareness Programme (external) |
| Regulators and Government Agencies
| · Briefings, engagements and consultative sessions · Meetings/discussions · Jointly organised events · Reports regarding capital market developments or compliance with statutory obligations (e.g. Annual Regulatory Report) · Participation in various government related committees or working groups (e.g. Joint Committee on Climate Change (JC3), Corporate Integrity System Malaysia (CISM) Roundtable, National Special Committee on Corporate Governance and Economic Action Council) |
| Employees
| · Meetings and feedback sessions · Training and engagement sessions on various topics (e.g. cyber security) · Employee Portal and Staff Zone · Bursa@Work emails · Other employee engagement Activities (e.g. festive celebrations) · Community events (e.g. Bursa Bull Charge (BBC)) |
| Bursa Malaysia’s shareholders and analysts
| · Annual Reports · Annual General Meetings · Half-yearly analyst and media briefings · Meetings · Circulars · Bursa Malaysia websites |
| Industry associations, professional bodies and industry experts
| · Meetings · Public consultations · Focus group sessions/ dialogues · Engagements through emails, phone calls or other means · Joint committees/task force with the industry (e.g. SMOC) · Collaborations to promote Initial Public Offerings (IPOs) through seminars and promotional events |
| Community groups
| · Flagship community programmes (e.g. BBC) · Employee volunteering · Meetings or engagement via phone calls, emails/ letters · Bursa Malaysia websites |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics Bursa Malaysia carried out an online survey of both internal and external stakeholders.
What actions were taken by Bursa Malaysia to promote ethical business behaviour?
In its 2019 Sustainability Report Bursa Malaysia reports that it took the following actions for promoting ethical business behaviour:
- Carrying out corruption risk assessments
- As the first step to identity potential high-risk areas, Bursa Malaysia’s Risk and Compliance (RC) team incorporated corruption-related elements in its Risk Control Self-Assessment (RCSA). This is a self-declaration exercise/tool that all divisions and departments are required to conduct, on a quarterly basis. Next, the RC team will continue to engage various stakeholders to strengthen the controls in place, and perform compliance reviews on high-risk areas. The reviews will be prioritised for departments with the highest exposure to corruption risks.
- Strengthening due diligence
- To minimise its risk exposure brought about by third parties, Bursa Malaysia strengthened its due diligence regarding anti-fraud, bribery and corruption when establishing relationships with vendors. This includes requiring vendors to make a commitment to Bursa Malaysia’s standards via the Vendor Declaration Form, as well as carrying out third party background checks and annual assessments on critical vendors.
- Establishing a Corporate Integrity Task Force
- Bursa Malaysia set up a Corporate Integrity Task Force to spearhead and coordinate the efforts to review its policies, procedures and controls to ensure it has ‘adequate procedures’ to prevent corruption, as required under section 17A, MACC Act 2009 (Corporate Liability Provision) and the Guidelines on Adequate Procedures issued pursuant to that section. Bursa Malaysia’s review also took into account the Corporate Integrity System Malaysia (CISM) Initiative’s policies required to be adopted by a Corporate Integrity Pledge signatory. The Task Force also led efforts to commence development of the Organisational Anti-Corruption Plan (OACP), which will outline Bursa Malaysia’s corporate anti-corruption strategies and action plans in preventing, detecting and managing fraud, bribery and corruption issues. The Task Force is chaired by the Director of Sustainability and comprises representatives from relevant divisions/ departments within Bursa Malaysia.
- Implementing a ‘three lines of defence’ strategy
- Bursa Malaysia employs a three-pronged approach to address fraud, bribery and corruption:
- Employees and management are responsible to identify fraud, bribery and corruption risks in their business units and operationalise effective controls in managing these risks.
- RC develops and monitors the implementation of effective fraud, bribery and corruption risk management policies. It also supports the Risk Management Committee’s oversight function by assisting the Board to fulfil its responsibilities in the management of fraud, bribery and corruption risks.
- Internal Audit (IA) enhances and protects Bursa Malaysia’s organisational value by providing risk-based and objective assurance, advice and insight. IA helps Bursa Malaysia accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, controls, and governance processes. The IA engagements are carried out based on an annual audit plan approved by the Audit Committee (AC). Depending on the auditable areas assessed and the scope of audit, the level of exposure to the relevant fraud, bribery or corruption risks will be taken into consideration during the audit process. The results of the audits in the IA reports are reviewed by the AC.
- Applying a Whistleblower Policy and Procedures
- Bursa Malaysia has a Whistleblower Policy and Procedures (WPP) to provide an avenue for employees or any external party to report any breach or suspected breach of any law or regulation, including business principles and policies and guidelines, in a safe and confidential manner. An employee who makes a report of improper conduct in good faith shall not be subject to unfair dismissal, victimisation, demotion, suspension, intimidation or harassment, discrimination, any action causing injury, loss or damage or any other retaliatory actions. The AC has the overall responsibility in overseeing the implementation and monitoring of the WPP, and ensuring effective administration by the Director of IA. To drive awareness and education on anti-fraud, bribery and corruption, Bursa Malaysia also provided training at all levels in its organisation, covering 93% of its employees and 100% of its Board as of August 2019.
- Implementing comprehensive policies and guidelines
- In addition to whistle-blowing policies, Bursa Malaysia has policies in place which support the management of corruption risks, including the following:
- Anti-Fraud, Bribery and Corruption Policy
- Enterprise Risk Management Principles and Framework
- Guidelines For Handling Conflict of Interest
- Code of Ethics for Bursa Malaysia Group
- Code of Conduct and Ethics for Directors
- Securities Transaction Policy for Bursa Malaysia Group
- Asset Declaration Guidelines
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 205-2 Communication and training about anti-corruption policies and procedures
2) Disclosure 205-3 Confirmed incidents of corruption and actions taken
Disclosure 205-2 Communication and training about anti-corruption policies and procedures corresponds to:
- Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Business theme: Anti-corruption
Disclosure 205-3 Confirmed incidents of corruption and actions taken corresponds to:
- Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Business theme: Anti-corruption
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References:
1) This case study is based on published information by Bursa Malaysia, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:
http://database.globalreporting.org/
2) https://www.globalreporting.org/standards/gri-standards-download-center/
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