Analysts have seen inflows year-to-date into Top Glove Corporation Bhd and Hartalega Holdings Bhd, arguably owing to their initiatives to ensure proper ESG compliance. — Bernama photo
KUCHING: The environmental, social and governance (ESG) issue, particularly allegations of forced labour, remains a major concern in the gloves industry.
In its gloves sector update, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) recapped on the imposition of a Withhold Release Order (WRO) by US Customs and Border Protection (CBP), as well as the recent termination of a sourcing contract for nitrile gloves from Canada due to allegations of forced labour for Supermax Corporation Bhd (Supermax).
“We believe that ESG remains a serious issue in the gloves industry,” MIDF Research said.
“The US Customs and Border Protection (CBP) import ban has cost the glove industry an estimated RM3.6 billion in potential glove export revenue, as announced by The Malaysian Rubber Gloves Manufacturers Association (MARGMA).
“Moreover, citing allegations of serious human rights violations, Norway’s sovereign wealth fund has placed one of Malaysia’s medical glove manufacturers under two-year surveillance.”
Despite implementing a foreign worker management policy to improve its labour standards to meet International Labour Organisation (ILO) criteria, the research arm believed there has been a gap in implementing the policies that led to its import bans in the US and Canada.
“As a result, we saw outflows year-to-date from Supermax by foreign investors beginning in January 2022.
“Likewise, during the same period, Kossan Rubber Industries Bhd saw outflows of foreign investors.
“On the other hand, we have seen inflows year-to-date into Top Glove Corporation Bhd and Hartalega Holdings Bhd, arguably owing to their initiatives to ensure proper ESG compliance.”