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ESG in the boardroom: From compliance to leadership
Feb 27, 2026
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6 min read
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ESG considerations are now firmly part of boardroom decision-making. Once treated as a technical or reporting related exercise, ESG is now increasingly recognised as a leadership issue that speaks to how organisations define long term value, resilience and relevance.
Boards today are operating in environments where external signals around ESG are mixed. In different parts of the world, political momentum on sustainability has become uneven, with a visible knock-on effect on how corporates approach ESG priorities. In such conditions, the role of the board becomes even more critical. When external direction is unclear, boards must provide their own clarity, judgement and long-term perspective.
One of the inherent challenges with ESG is that its benefits are rarely immediate. Markets and investors often assess performance on a quarter-to-quarter or year-to-year basis, focusing on near term results and dividend capacity. ESG, by contrast, requires decisions that may only demonstrate their full value over a longer period. Reconciling these different time horizons is not easy, but it is a tension boards must navigate deliberately if they are serious about sustainability in both practice and longevity.
A board member’s perspective
In Malaysia, board level ESG engagement remains uneven, although there has been a noticeable increase in training and awareness sessions aimed at helping directors better understand ESG responsibilities and expectations. These efforts are important as boards work to build collective capability in an area that continues to evolve.
Despite this progress, ESG discussions are still often treated as discrete agenda items, largely framed around regulatory requirements and reporting obligations. They are not always fully integrated into broader strategy conversations. While some boards have begun moving beyond a box ticking approach towards more substantive discussion, this shift is not yet consistent across organisations.
Board culture plays an important role in shaping ESG oversight. Effective governance is not only about formal structures or committees, but also about whether directors feel confident raising ESG considerations during discussions on strategy, investments or major business decisions, even when ESG is not explicitly listed on the agenda. Board members need to be willing to bring ESG into these conversations as part of exercising sound judgement, rather than treating it as a separate or secondary topic.
Developments in the global ESG landscape underline the importance of board leadership. One example that springs to mind is the exit of major banks from the Net Zero Banking Alliance, even as many reaffirm their individual commitments, which had a symbolic impact that should not be underestimated. Such developments shape public trust and perceptions about the seriousness of ESG efforts, reinforcing the need for boards to provide clarity and consistency in their governance approach.
Board composition is another relevant consideration. Ideally, boards would benefit from having members with ESG expertise. In practice, this can be challenging given the relatively limited pool of experienced practitioners. As a result, boards need to think more broadly about how ESG understanding is built collectively, whether through composition, ongoing education or access to external perspectives.
Accountability also remains an important theme. While ESG considerations are increasingly linked to leadership responsibility and succession planning, this area continues to develop. At this stage, it is more important for boards to establish clear oversight principles and expectations than to focus prematurely on specific mechanisms.
Ultimately, stakeholder trust depends on consistency and credibility. Reporting remains an important part of ESG, but it cannot substitute for genuine board level conviction. Moving from compliance driven reporting to meaningful governance is a journey many boards are still navigating.
A CFO’s perspective on execution
From a management perspective, operationalising ESG is complex. Translating board level ambition into day-to-day execution requires depth of understanding, coordination across functions and sustained commitment.
ESG extends beyond traditional financial metrics, and while compliance is necessary, it does not fully address broader questions of environmental sustainability, social impact or long-term societal outcomes. Without sufficient depth of understanding, there is a risk that ESG becomes procedural rather than strategic. Therefore, in practice, ESG discussions at management level can sometimes remain superficial, particularly when the immediate focus is on meeting regulatory requirements.
Data is another significant constraint. Because data quality and availability can vary, credible ESG decision-making depends on having good, realistic and reliable data. Without robust data, it is challenging to assess progress, identify trade-offs or support sound strategic decisions.
Boards today are operating in environments where external signals around ESG are mixed. In different parts of the world, political momentum on sustainability has become uneven, with a visible knock-on effect on how corporates approach ESG priorities. In such conditions, the role of the board becomes even more critical. When external direction is unclear, boards must provide their own clarity, judgement and long-term perspective.
One of the inherent challenges with ESG is that its benefits are rarely immediate. Markets and investors often assess performance on a quarter-to-quarter or year-to-year basis, focusing on near term results and dividend capacity. ESG, by contrast, requires decisions that may only demonstrate their full value over a longer period. Reconciling these different time horizons is not easy, but it is a tension boards must navigate deliberately if they are serious about sustainability in both practice and longevity.
A board member’s perspective
In Malaysia, board level ESG engagement remains uneven, although there has been a noticeable increase in training and awareness sessions aimed at helping directors better understand ESG responsibilities and expectations. These efforts are important as boards work to build collective capability in an area that continues to evolve.
Despite this progress, ESG discussions are still often treated as discrete agenda items, largely framed around regulatory requirements and reporting obligations. They are not always fully integrated into broader strategy conversations. While some boards have begun moving beyond a box ticking approach towards more substantive discussion, this shift is not yet consistent across organisations.
Board culture plays an important role in shaping ESG oversight. Effective governance is not only about formal structures or committees, but also about whether directors feel confident raising ESG considerations during discussions on strategy, investments or major business decisions, even when ESG is not explicitly listed on the agenda. Board members need to be willing to bring ESG into these conversations as part of exercising sound judgement, rather than treating it as a separate or secondary topic.
Developments in the global ESG landscape underline the importance of board leadership. One example that springs to mind is the exit of major banks from the Net Zero Banking Alliance, even as many reaffirm their individual commitments, which had a symbolic impact that should not be underestimated. Such developments shape public trust and perceptions about the seriousness of ESG efforts, reinforcing the need for boards to provide clarity and consistency in their governance approach.
Board composition is another relevant consideration. Ideally, boards would benefit from having members with ESG expertise. In practice, this can be challenging given the relatively limited pool of experienced practitioners. As a result, boards need to think more broadly about how ESG understanding is built collectively, whether through composition, ongoing education or access to external perspectives.
Accountability also remains an important theme. While ESG considerations are increasingly linked to leadership responsibility and succession planning, this area continues to develop. At this stage, it is more important for boards to establish clear oversight principles and expectations than to focus prematurely on specific mechanisms.
Ultimately, stakeholder trust depends on consistency and credibility. Reporting remains an important part of ESG, but it cannot substitute for genuine board level conviction. Moving from compliance driven reporting to meaningful governance is a journey many boards are still navigating.
A CFO’s perspective on execution
From a management perspective, operationalising ESG is complex. Translating board level ambition into day-to-day execution requires depth of understanding, coordination across functions and sustained commitment.
ESG extends beyond traditional financial metrics, and while compliance is necessary, it does not fully address broader questions of environmental sustainability, social impact or long-term societal outcomes. Without sufficient depth of understanding, there is a risk that ESG becomes procedural rather than strategic. Therefore, in practice, ESG discussions at management level can sometimes remain superficial, particularly when the immediate focus is on meeting regulatory requirements.
Data is another significant constraint. Because data quality and availability can vary, credible ESG decision-making depends on having good, realistic and reliable data. Without robust data, it is challenging to assess progress, identify trade-offs or support sound strategic decisions.
Joanne Rodrigues is the group chief financial officer of Affin Bank Bhd, serves on the Board of Generali Insurance Malaysia Bhd and is a member of the Institute of Chartered Accountants in England and Wales.
As an Institute of Chartered Accountants in England and Wales chartered accountant, the discipline of data credibility, professional judgement and long-term thinking shapes how I approach ESG decision-making. This is an area where the finance function and the accounting profession play an important role, not by providing perfect answers, but by strengthening the foundations on which decisions are made.
For many organisations, the integrated thinking to link ESG considerations with financial performance remains a work in progress. While there is growing recognition that ESG and financial outcomes are connected, articulating and operationalising that connection is not straightforward. It requires organisations to look beyond short-term metrics and consider how sustainability factors influence risk, resilience and value creation over time.
At Affin, ESG initiatives are approached with the intention of delivering balance across environmental, social and governance dimensions, reflecting an understanding that sustainability is multi-faceted, and that progress in one area should not come at the expense of another.
Bringing the roles together
Holding both board and chief financial officer roles has deepened my appreciation of how ESG governance and execution intersect. Board experience sharpens the questions I ask as part of management, while management experience grounds my contributions at board level in operational reality. This interplay helps shift ESG discussions away from being purely administrative or report driven, towards conversations that focus on strategy and real-world impact.
Ultimately, ESG in the boardroom is less about having all the answers and more about asking the right questions. It requires boards and management to engage with complexity and long-term thinking, even when external signals are inconsistent and short-term pressures remain. By approaching ESG as a strategic leadership issue rather than a compliance exercise, boards can play a meaningful role in guiding their organisations towards sustainable and resilient futures.
Article By JOANNE RODRIGUES
Source: ESG in the boardroom: From compliance to leadership (Friday, 27 Feb 2026). The Star. Retrieved from https://www.thestar.com.my/esg/2026/02/27/esg-in-the-boardroom-from-compliance-to-leadership
Disclaimer
The information provided in this report is of a general nature and has been prepared for information purposes only. It is not intended to constitute research or as advice for any investor. The information in this report is not and should not be construed or considered as an offer, recommendation or solicitation for investments. Investors are advised to make their own independent evaluation of the information contained in this report, consider their own individual investment objectives, financial situation and particular needs and should seek appropriate personalised financial advice from a qualified professional to suit individual circumstances and risk profile. The information contained in this report is prepared from data believed to be correct and reliable at the time of issuance of this report. While every effort is made to ensure the information is up-to-date and correct, Bond and Sukuk Information Platform Sdn Bhd (“the Company”) does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information contained in this report and accordingly, neither the Company nor any of its affiliates nor its related persons shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.
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