by AZHARI-KARIM                                                                                                                                       
                                                                                                                                                      
COMPANIES are now familiar with their annual financial                                                                                                
statements. Beginning 2001, many Malaysian companies have also                                                                                        
started to report on their performance in managing issues                                                                                             
concerning the environment.                                                                                                                           
                                                                                                                                                      
Yet a third component, corporate social responsibility (CSR),                                                                                         
will be added to the requirement, making it a triple bottom                                                                                           
line reporting system for companies.                                                                                                                  
                                                                                                                                                      
As to the standard of financial reporting by our companies, it                                                                                        
was noted that the submissions by the public listed companies                                                                                         
have dramatically improved in the areas of transparency and                                                                                           
accountability.                                                                                                                                       
                                                                                                                                                      
But it was also believed that many companies are still too                                                                                            
focused on design rather than the substance: the writing and                                                                                          
financial information.                                                                                                                                
                                                                                                                                                      
Keeping tab of a company's environmental policies, which is now                                                                                       
recognised as the second bottom line, is very new in Malaysia.                                                                                        
                                                                                                                                                      
It comes just after the serious concern expressed over the                                                                                            
standards of corporate governance in our companies.                                                                                                   
                                                                                                                                                      
In a recent move by the relevant bodies, company directors have                                                                                       
been directed to attend special workshops on the subject.                                                                                             
                                                                                                                                                      
On the environment, we are in fact following closely on                                                                                               
developments in the West, where the private sector has taken                                                                                          
the lead.                                                                                                                                             
                                                                                                                                                      
In Malaysia, the practice has been slowly catching up.                                                                                                
According to the criteria set by the organisers of the National                                                                                       
Annual Corporate Report Awards (Nacra), the environmental                                                                                             
reporting has been designed "to raise awareness towards the                                                                                           
apparent benefits that are to be derived from corporate                                                                                               
considerations of environmental issues and its protection".                                                                                           
                                                                                                                                                      
Future Annual Reports will now carry statements on                                                                                                    
environmental management, performance, and research and                                                                                               
development initiatives.                                                                                                                              
                                                                                                                                                      
From representatives of the companies, it would appear that                                                                                           
many would like to comply with this new requirement.                                                                                                  
                                                                                                                                                      
But more should be done in the area of verification, compliance                                                                                       
and enforcement. A proper authority must also be instituted to                                                                                        
oversee this development.                                                                                                                             
                                                                                                                                                      
Several issues that have arisen of late were concerned with the                                                                                       
willingness of companies to allow themselves to be inspected,                                                                                         
the time-frame for compliance and the sort of partnership that                                                                                        
must evolve among businesses as well as the authorities.                                                                                              
                                                                                                                                                      
Another issue is involved with the need to keep up with global                                                                                        
trends.                                                                                                                                               
                                                                                                                                                      
In some areas, it seemed Malaysia is far ahead of other                                                                                               
countries in the region.                                                                                                                              
                                                                                                                                                      
In others, we do lag very far behind even in the area of                                                                                              
providing basic amenities like water, food and shelter for                                                                                            
workers and the community at large.                                                                                                                   
                                                                                                                                                      
Part of the problem is the lack of understanding and awareness                                                                                        
of the relevant issues regarding the protection of the                                                                                                
environment.                                                                                                                                          
                                                                                                                                                      
In Malaysia, at least there are far too many agencies claiming                                                                                        
to have involvement in it.                                                                                                                            
                                                                                                                                                      
As a result, there appears to be a noticeable absence of                                                                                              
dialogue and interaction between the various agencies.                                                                                                
                                                                                                                                                      
The last of the triple bottom line reporting is CSR. The                                                                                              
community aspect is at the heart of the Corporate Social                                                                                              
Responsibility reporting requirement.                                                                                                                 
                                                                                                                                                      
Loosely defined, CSR is usually understood to cover the                                                                                               
following three areas: economic, social and ecological/                                                                                               
environmental responsibility.                                                                                                                         
                                                                                                                                                      
All of these areas contain several aspects that are culture                                                                                           
dependent.                                                                                                                                            
                                                                                                                                                      
In addition, it is often considered that these areas are                                                                                              
underpinned by corporate values and ethical conduct.                                                                                                  
                                                                                                                                                      
It is also observed that each of this aspect is of interest to                                                                                        
a variety of stakeholders and they also include the employees,                                                                                        
authorities and even nongovernmental organisations.                                                                                                   
                                                                                                                                                      
When presented to a Malaysian audience, the idea of identifying                                                                                       
stakeholders, has posed some problems.                                                                                                                
                                                                                                                                                      
The term "stakeholder" is defined very narrowly in the                                                                                                
Malaysian context.                                                                                                                                    
                                                                                                                                                      
While here it is associated with people or institutions that                                                                                          
have a direct responsibility in the running and ownership of                                                                                          
the business, the term is applied in its widest sense, it is                                                                                          
long-term, multi and global.                                                                                                                          
                                                                                                                                                      
The reporting format is also different. The practice in the                                                                                           
West has based it on the guidelines contained in the Global                                                                                           
Reporting Initiative (GRI), whose mission is to develop and                                                                                           
disseminate "globally applicable sustainability reporting                                                                                             
guidelines" for voluntary use by organisations reporting on the                                                                                       
economic, environmental and social dimensions of their                                                                                                
activities, products and services.                                                                                                                    
                                                                                                                                                      
It may take some time before this practice can take hold in                                                                                           
Malaysia.                                                                                                                                             
                                                                                                                                                      
Apart from the problems in relation to the two other components                                                                                       
discussed earlier, there is still the issue of raising                                                                                                
awareness and getting people to buy the idea.                                                                                                         
                                                                                                                                                      
As a first step, companies can organise workshops to identify                                                                                         
stakeholders and consider such items as human rights, community                                                                                       
outreach programmes, product safety, environment and corporate                                                                                        
ethics.                                                                                                                                               
                                                                                                                                                      
Companies must need to commit themselves to report on the                                                                                             
management of their social responsibilities.                                                                                                          
                                                                                                                                                      
The agenda for the future of such a reporting system, if it is                                                                                        
going to be applied here, must rest with our business                                                                                                 
community.                                                                                                                                            
                                                                                                                                                      
The long-term objective must as always include the company's                                                                                          
sustainability programmes and success in the economic,                                                                                                
environment and social areas.                                                                                                                         
                                                                                                                                                      
Nacra and its organisers have a very important role here.                                                                                             
                                                                                                                                                      
Perhaps in 2001, the triple bottom line reporting requirement                                                                                         
can be made mandatory.