The Construction Industry Development Board’s (CIDB) push for environmental, social, and governance (ESG) adoption is boosting construction sector performance, said CGS International Securities Malaysia Sdn Bhd.
According to a report by the New Straits Times, the firm noted that CIDB is driving ESG adoption through greater use of industrial building systems (IBS) and digital tools such as building information modelling (BIM), in line with the National Construction Policy 2030.
The initiative aims to reduce labour reliance, greenhouse gas emissions, and workplace injuries, while ensuring foreign workers are skilled and certified.
CGS International also noted that major contractors like Gamuda Bhd lead in advanced IBS facilities, fast project delivery, and strong labour practices.
The firm said Sunway Construction Group Bhd and IJM Corp Bhd are also making progress, with adoption of IBS, BIM, lost time injury frequency rate (LTIFR) management, and employee welfare reflected in their scores.
“Higher ESG adoption has also boosted returns, with contractors’ shares rising an average of 125 per cent since January 2024.
“Data centre projects benefiting from IBS and BIM offer higher margins and shorter timelines, improving return on equity (ROE).
“For example, Sunway Construction saw ROE rise from 20.3 per cent in FY22 to 32.3 per cent in FY25, with its share price up 329 per cent due to high data centre exposure,” it said.
