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What Is The Guide to Annual Reports?

Welcome to the 2nd edition of The Guide to Annual Reports in Malaysia, Black Sun’s annual flagship research, which identifies trends and best practice in corporate reporting, and assesses how companies are responding to challenges and changes within the reporting landscape. Through The Guide, we hope to stimulate debate around what constitutes ‘best practice’ and contribute to the wider development towards long-term thinking, disclosure, and transparency.

Foreword by Michele Kythe Lim, President/CEO, Institute of Corporate Directors Malaysia


“The global business landscape has been plagued with news of corporate failures, with major companies finding themselves embroiled in public scandals. Many of these cases are largely driven by poor governance and an unhealthy corporate culture.

In the presence of heightening regulatory accountability and scrutiny, regulators in the UK and US are also encouraging companies to report on their corporate culture.  The oversight of culture is now a growing priority for Boards. In Malaysia, the Malaysian Code on Corporate Governance aims to strengthen good corporate governance culture pillared on accountability and transparency - the Boards should be committed to promoting good business conduct and maintaining a healthy corporate culture that engenders integrity, transparency and fairness.

At the Institute of Corporate Directors Malaysia (ICDM), we understand the importance in building a culture of trust. Through our inaugural ICDM International Directors Summit, aptly themed “The Trust Compass: Resetting the Course”, we hope to underscore the urgent need for all stakeholders to address the crisis of trust and to provide the reassurance of the commitment and direction towards this goal.

We are pleased to support this timely piece of research on “The Importance of Culture Reporting” by Black Sun. We agree that one of the ways companies can build  and cultivate trust is through culture reporting. It’s the art of telling the company’s story in an engaging way, creating the conditions needed for retaining and heightening investors as well as consumers’ confidence.”

Foreword by Michele Kythe Lim, President/CEO, Institute of Corporate Directors Malaysia


“The global business landscape has been plagued with news of corporate failures, with major companies finding themselves embroiled in public scandals. Many of these cases are largely driven by poor governance and an unhealthy corporate culture.

In the presence of heightening regulatory accountability and scrutiny, regulators in the UK and US are also encouraging companies to report on their corporate culture.  The oversight of culture is now a growing priority for Boards. In Malaysia, the Malaysian Code on Corporate Governance aims to strengthen good corporate governance culture pillared on accountability and transparency - the Boards should be committed to promoting good business conduct and maintaining a healthy corporate culture that engenders integrity, transparency and fairness.

At the Institute of Corporate Directors Malaysia (ICDM), we understand the importance in building a culture of trust. Through our inaugural ICDM International Directors Summit, aptly themed “The Trust Compass: Resetting the Course”, we hope to underscore the urgent need for all stakeholders to address the crisis of trust and to provide the reassurance of the commitment and direction towards this goal.

We are pleased to support this timely piece of research on “The Importance of Culture Reporting” by Black Sun. We agree that one of the ways companies can build  and cultivate trust is through culture reporting. It’s the art of telling the company’s story in an engaging way, creating the conditions needed for retaining and heightening investors as well as consumers’ confidence.”

The Importance of Culture Reporting

What’s the big deal about corporate culture reporting? As evidenced by significant controversies that often make headlines, an organisation’s success is closely tied to its culture and tone at the top. We therefore believe that culture should be more prominently featured in annual reports, a key source of information for shareholders and stakeholders. This year’s research focuses on the prevalence of culture reporting, an important yet often overlooked component of corporate reporting.

At present, where do companies stand on culture reporting?

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One: Culture Commitment

Culture commitment explains how a company commits to its purpose, values and culture. Despite it being closely tied to a company’s identity, performance and success, Malaysian companies still have a long way to go in this regard, only one in four companies discussed culture in their leadership statements. The role of leadership is imperative in enhancing transparency and building trust among stakeholders, and more companies should strive to express their tone at the top and articulate their values.

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Two: Culture Measurement

Culture measurement looks at the various approaches on how culture is measured in a company. Despite scoring well in terms of identifying their strategic priorities/objectives and non-financial KPIs, most companies still have room for improvement in the disclosure of targets relating to these objectives as well as embedding values. In the light of the soon-to-be-enforced provision by the MACC to prosecute companies involved in corruption, it is more crucial that companies see the importance and value of measuring and reporting on culture.  

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Three: Culture Implementation

Culture implementation discusses how culture is embedded throughout the organisation. Among Malaysian companies, attempts have been made to demonstrate the efforts in this respect, with approximately two-thirds discussing efforts to incorporate a sustainability focus in their strategy section.  More remains to be done, as less than half showed clear linkages between strategic information and checked for alignment of their culture and values.

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Four: Culture Evaluation

Culture evaluation is a review of how companies examine their processes relating to culture. Overall, KLCI30 companies have performed admirably in terms of reporting on culture evaluation, showing an understanding of the need to provide quality information. However, further improvements can be made through more meaningful insights on stakeholder engagement and evaluation of the Board’s performance.  

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