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ESG themes to shape investment decisions
Jan 21, 2026
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The introduction of a carbon tax on the iron, steel and energy sectors will directly affect cash flows and profitability of corporations.
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Against this backdrop, Hong Leong Investment Bank (HLIB) Research said its top ESG picks are Bursa Malaysia Bhd, for which it has a “buy” call with a target price (TP) of RM9.60 a share, IOI Corp Bhd (“buy”; TP: RM4.45 a share) and Solarvest Holdings Bhd (“buy”; TP: RM3.66 a share).
The introduction of a carbon tax on the iron, steel and energy sectors will directly affect cash flows and profitability of corporations, sharpening investor focus on operational efficiency and emissions intensity, and widening the valuation gap between leaders and laggards.
Rising material costs and tighter regulation are pushing the circular economy and waste management from a niche consideration into a core operational and margin preservation imperative.
The adoption of the International Financial Reporting Standards-Sustainability Disclosure Standards under the NSRF is set to improve data consistency and comparability, according to HLIB Research.
It said planters such as SD Guthrie Bhd and Johor Plantations Group Bhd are effectively transforming legacy environmental liabilities into recurring green revenue streams, validating the sector’s potential as a sustainable bio-economy hub.
In the downstream segment, Yenher Holdings Bhd is transforming organic waste into sustainable protein.
HLIB Research noted that 2025 was a year of mixed signals.
“While COP 30 (the United Nations Climate Change Conference) delivered progress through a tripling of global adaptation finance to US$120bil, it failed to mandate a fossil fuel phase-out, leaving the world on a 2.3°C warming trajectory.
“In Malaysia, sustainability considerations are increasingly viewed not as a trade-off to returns, but as integral to preserving value, enhancing resilience and managing structural risks over the investment horizon.”
HLIB Research said the number of sustainable and responsible investment funds registered with the Securities Commission continued to rise from 34 in 2021 to 77 in 2025.
“Total assets under management expanded more than fourfold over the same period from RM5.07bil to RM22.35bil.
“As the 12th Malaysia Plan concludes, the country is broadly on track, having exceeded green procurement targets (40.5%) and neared the 31% renewable energy capacity milestone under the National Energy Transition Roadmap,” it said.
Meanwhile, renewable energy capacity has reached 30%, led by solar energy which contributes more than 5GW, said the research house.
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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