Employees perception towards the implementation of environmental social and governance (ESG) practices in Malaysia

Lim, Yong Nie (2025) Employees perception towards the implementation of environmental social and governance (ESG) practices in Malaysia. Master dissertation/thesis, UTAR.

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Abstract

This study examines the critical factors that influence employee perceptions of Environmental, Social, and Governance (ESG) programme implementation in Malaysian organizations. In an era marked by heightened global sustainability awareness and significant corporate controversies related to ethical labour practices and governance lapses, understanding how internal stakeholders perceive ESG initiatives is paramount. Drawing upon psychological contract theory, agency theory, and stewardship theory, the research posits that key determinant—namely board independence, the adequacy of financial reporting and auditing, top management commitment, and transparency—play pivotal roles in shaping employees' trust and engagement with ESG programmes. A quantitative research design was adopted, with data collected via structured questionnaires distributed among employees in Glenmarie Industrial Park, Shah Alam. Advanced statistical techniques, including descriptive analysis and regression analysis using SPSS, were employed to analyse the relationships between the independent governance variables and employee perceptions of ESG effectiveness. The findings reveal that robust governance mechanisms and transparent communication strategies not only enhance the credibility of ESG initiatives but also promote a culture of sustainability that aligns with organizational values. Moreover, the study underscores that employees are more likely to actively support and participate in ESG efforts when they perceive a genuine commitment from both leadership and the broader corporate governance framework. This research contributes to the theoretical development of agency and stewardship theories by highlighting the significant role of internal stakeholder perceptions in the successful implementation of ESG programmes. The implications extend to practitioners and policymakers, suggesting that fostering an environment of trust and accountability is essential for achieving long-term corporate sustainability and competitive advantage. Keywords: Employee Perception; ESG Programme Implementation; Corporate Governance; Top Management Commitment; Transparency Subject Area: HD60-60.5 Social responsibility of business

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