Investigating barriers to environmental, social and governance (ESG) adoption in the Malaysia construction industry

Tan, Ee Yinn (2025) Investigating barriers to environmental, social and governance (ESG) adoption in the Malaysia construction industry. Final Year Project, UTAR.

PDF Download (1216Kb)

Abstract

The growing global emphasis on sustainability has placed Environmental, Social, and Governance (ESG) practices at the forefront of responsible business operations. Despite the construction sector's significant role in economic development, environmental impact, and community well-being, ESG adoption in Malaysia’s construction industry remains limited due to various contextual challenges. This research aims to investigate the key barriers hindering the adoption of ESG practices and to identify the main drivers and strategies that can facilitate its implementation. A comprehensive literature review was conducted to identify 12 drivers, 14 barriers, and 10 strategies, which were further explored through a quantitative questionnaire survey. The survey targeted construction professionals, including consultants, developers, and contractors within the Klang Valley area, yielding 132 valid responses. The collected data were analysed and ranked according to their mean scores. The results revealed that external pressures, such as market force and clients’ demand, industry competitiveness, and government legislation and policy emerge as the key drivers for ESG integration. On the other hand, limited data and lack of long-term comparability, lack of resources, and lack of established standards and guidelines for ESG activities are the major barriers impeding the adoption of ESG practices in construction firms. Meanwhile, the findings also highlighted the importance of government subsidies, standards for ESG activities, and enforcement of regulations and policies as effective strategies to encourage ESG adoption. Notably, the enforcement of regulations and policies was found to be significantly correlated with all identified barriers. Additionally, the Spearman’s correlation test uncovered that resistance to change and top management initiatives have the strongest correlation among the variables. This research provides valuable insights into the current state of ESG adoption in Malaysia’s construction industry and highlights specific areas requiring policy and industry attention. The results can guide construction professionals, policymakers, and regulators in formulating practical strategies to overcome existing barriers and drive sustainable transformation in the sector. Keywords: ESG adoption; sustainable development; corporate sustainability; Malaysian construction industry; barriers. Subject Area: TH6014-6081 Environmental engineering of buildings. Sanitary engineering of buildings

Actions (login required)