Takeaways

• Rising ESG transparency among Malaysian planters is strengthening investor confidence and may trigger a sector re-rating.
• SD Guthrie, IOI Corporation, and Hap Seng Plantations emerge as top performers in the 2025 SPOTT assessment.
• Improved disclosures on environmental risks, labour rights, and supply chain practices position Malaysian planters ahead of global peers.

CIMB Investment Bank Bhd (CIMB Securities) has reiterated its OVERWEIGHT call on the plantation sector, saying stronger ESG transparency among Malaysian planters could lift valuations and support a long-term sector re-rating. In a new report, the research house said companies under its coverage saw the biggest gains in the environmental pillar of the 2025 SPOTT assessment, with moderate improvements in both social and governance areas.

CIMB Securities highlighted SD Guthrie, IOI Corporation, and Hap Seng Plantations as the key beneficiaries of this trend, maintaining Buy calls on all three. SD Guthrie topped global rankings with a SPOTT score of 97.5%, an improvement of 2.7 percentage points from last year. Hap Seng Plantations and IOI Corporation also performed well, scoring 91.2% and 85.1%, placing them among the top 20 sustainable palm oil companies assessed worldwide.

The SPOTT assessment, published by the Zoological Society of London (ZSL), is widely monitored by investors and tracks up to 192 indicators covering 10 major ESG categories. While the latest findings show that transparency among Malaysian planters has strengthened, global progress remains mixed. Only 51% of companies worldwide disclosed deforestation monitoring efforts, and just 18% reported full supply chain traceability, two areas that continue to draw close scrutiny from investors.

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Even so, Malaysian firms stood out for their improved environmental reporting, with better disclosures on emissions, forest protection, and deforestation monitoring. These developments come ahead of key global milestones, including the European Union Deforestation Regulation (EUDR) and COP30 in Brazil. CIMB Securities said the social pillar also saw gains as more companies disclosed information on labour rights, smallholder support, and community engagement, though governance scores remained broadly steady.

According to the research house, stronger ESG transparency is improving the industry’s reputation and could draw renewed foreign investor interest, especially as global funds increasingly prefer companies aligned with international sustainability standards. The sector has long been under-owned due to concerns about environmental risks linked to palm oil production, but the latest SPOTT results suggest meaningful progress.

The improvement in rankings reflects broader efforts among Malaysian planters to strengthen their sustainability frameworks. SD Guthrie and United Plantations now hold the top two positions globally, signalling a shift in how regional producers are approaching responsible growth and sustainable palm oil practices.

Also Read: How ESG Ratings Impact Stock Returns: A Guide for Investors

On the valuation front, CIMB Securities has set target prices of RM6.01 for SD Guthrie, RM4.11 for IOI Corporation, and RM2.23 for Hap Seng Plantations. It added that consistent gains in ESG metrics, combined with healthy dividend yields of between 2.5% and 4.6%, could support stronger long-term prospects for the sector. With global investors placing greater emphasis on transparency and accountability, CIMB believes Malaysian plantation companies are increasingly well-positioned to capture new growth opportunities.

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Source: BUSINESS TODAY