What is a stock-market index?
A stock-market index tracks a selected group of shares using a set of rules. The companies included are its constituents. The index value shows how that group performs collectively; it is not a company's sustainability score.
Each constituent has a weight, meaning its share of the index. For this index, weights reflect investable market value, rather than giving every company an equal weight or ranking them by ESG score. Free float is the portion of shares available for public investment. FTSE Russell's Bursa Malaysia index rules explain the weighting approach.
An index can be a benchmark—a reference for comparing investment performance—or underpin an investment product. Buying units in a fund that follows it is a separate decision involving that fund's costs, holdings and risks. The official factsheet describes the index's intended uses.
Who operates it, and why was it introduced?
Bursa Malaysia developed the index with FTSE, now presented through FTSE Russell, an index business within London Stock Exchange Group (LSEG). FTSE International Limited is the benchmark administrator responsible for its calculation and operation. See the official management responsibilities.
The index launched on 22 December 2014. Bursa describes its aims as helping investors consider ESG in Malaysian investments, increasing companies' visibility, encouraging better disclosure and supporting a more sustainable economy. That launch history is separate from today's selection rules. Bursa's index overview and the FTSE Russell factsheet provide the background.
Which companies can be considered?
The starting pool is the FTSE Bursa Malaysia EMAS Index. EMAS brings together eligible large, medium and smaller Main Market companies. Being listed on Bursa, or receiving an ESG rating, does not automatically put a company in that pool or in FTSE4Good. See FTSE4Good rule 4.1 and the underlying index definitions, section 1.4.
Bursa publishes ESG ratings for Main Market and ACE Market companies more broadly. An unlisted small or medium enterprise (SME) supplier cannot join this stock-market index simply by completing a sustainability questionnaire. Its information can still matter to a listed customer's assessment and reporting.
How do the ESG assessments work?
ESG means environmental, social and governance. FTSE Russell assesses how companies manage relevant issues across these three areas:
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| Area | Examples of issues assessed |
|---|---|
| Environmental | Climate change, water, biodiversity, pollution and environmental supply-chain practices |
| Social | Labour standards, human rights, health and safety, customer responsibility and social supply-chain practices |
| Governance | Corporate governance, corruption controls, risk management and tax transparency |
The model contains 14 themes and more than 300 indicators, with relevant indicators applied to each company's circumstances. A theme is a group of related issues; an indicator is a particular assessment point. Overall scores run from 0 to 5, with 5 highest.
Exposure means how relevant an issue is to the business. More exposed companies face higher assessment standards, and more relevant themes receive more weight in the score. A water-intensive manufacturer and a service business therefore need not face identical assessments. The August 2026 ESG Data Model Methodology explains the structure and calculations.
Researchers use public information, including company reports and websites. Companies can review the research and point out additional public evidence; FTSE Russell decides whether to change the assessment. That makes clear, supported disclosure useful, but the process is not a company choosing its own score. Read FTSE Russell's data collection and engagement explanation.
What criteria and exclusions affect inclusion?
The August 2026 FTSE4Good Index Series rules, version 6.1, set these emerging-market score requirements. Malaysia is classified as Advanced Emerging—a market category in FTSE's classification—in the April 2026 market matrix.
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| Test in the published emerging-market rules | Entry | Continued membership |
|---|---|---|
| Overall ESG score | At least 2.9 | At least 2.4 |
| Applicable high-exposure themes | No theme score of 0 | No separate high-exposure theme minimum |
| Climate-change theme for specified industries | 3 for primary-impact industries; 1 for secondary-impact industries | Same climate requirements |
Primary and secondary impact are FTSE's industry groupings for these climate tests. Additional sector requirements apply to nuclear-power generators and businesses manufacturing and marketing infant formula or breast-milk substitutes. Data coverage, market eligibility and exclusions also matter. Passing the overall score threshold alone does not establish eligibility. Read section 6 and the climate subsector appendix.
The Bursa-specific rules exclude tobacco producers, companies in the specified coal industry category, non-military firearms producers and specified military and controversial-weapons activities. Certain investment vehicles are also ineligible. Conduct-related screens apply through the companion rules. Use the actual definitions when assessing a business: “coal industry category” is not an exclusion of every company that uses coal or electricity. See the local exclusions, sections 4 and 6, alongside the exclusion-list guide.
These are an August 2026 edition summary. The companion rules allow changes to be phased in, and we did not establish the implementation notice for these amendments. Before planning around a numerical threshold, confirm the rules and transition arrangements applying to your next review. The table does not reconstruct the criteria used for earlier admissions.
How is membership reviewed, and can it change?
Reviews take place in June and December. Regular changes are implemented after the third Friday's market close, effective the following Monday. Leaving the underlying EMAS Index or a corporate event such as a takeover can also affect membership. The local rules cover reviews and corporate changes in sections 7–8.
For specified failures of ongoing ESG criteria, the companion rules allow one year before deletion if the failure remains. This is not a universal grace period for exclusions. See rules 6.1.5 and 6.2.
Assessment also has a time lag. Reports must meet publication cut-offs, and different data sets have their own dates. The September 2026 data-input guide explains these. A membership announcement is not continuous assurance about everything happening in the business.
If a company leaves, check the stated reason before drawing conclusions about its sustainability performance.
How does the Shariah index differ?
The FTSE4Good Bursa Malaysia Shariah Index (F4GBMS) selects the Shariah-compliant constituents of the FTSE4Good Bursa Malaysia Index (F4GBM). Shariah screening assesses eligibility under Islamic principles. This variant combines ESG selection with screening under the Securities Commission Malaysia's Shariah Advisory Council (SAC) methodology. Bursa introduced it in 2021 to serve investors seeking both attributes. Bursa's overview explains the relationship.
The extra screen does not mean a constituent has a higher ESG score than companies in the parent index. ESG assessment and Shariah compliance answer different questions; check the named index when reading an announcement.
What does inclusion tell you—and what does it leave open?
Inclusion indicates membership under the applicable selection and maintenance rules, using the evidence and assessment dates behind that decision. It can give you a useful reference for investor conversations and a reason to examine the underlying disclosures.
It does not establish that:
- every project, product or expenditure meets green-finance criteria;
- the company has no environmental or social problems;
- every sustainability disclosure has received independent assurance;
- the company complies with every applicable law or reporting requirement;
- its shares will deliver better investment returns; or
- a financier will approve borrowing or offer better terms.
This is an interpretation of the index's scope, rather than a separate certification. FTSE Russell also states that inclusion is not a recommendation to buy, sell or hold a share. See the factsheet disclaimer.
Keep these four questions separate:
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| Question | Evidence you need |
|---|---|
| Is the company an index constituent? | The named index, dated constituent information and relevant review notices |
| Is this project eligible for green financing? | The project's purpose and safeguards, applicable classification criteria and product requirements; the Green Loan Principles assess eligible use of the borrowed money |
| Has the company met its reporting obligations? | Applicable listing/regulatory requirements, reporting period, disclosures and assurance scope; start with official NSRF resources |
| Will financing be available, and on what terms? | The financier's credit assessment, repayment case, security, product eligibility and actual offer |
For example, an index constituent seeking funding for new equipment still needs to show why that equipment qualifies and how the borrowing will be repaid. Membership cannot do those jobs for it.
Why might your company and its SME suppliers care?
For a listed company's finance and sustainability teams, the assessment can help focus conversations about evidence, operational improvements and investor expectations. A practical starting point is to:
- Confirm your company's underlying-index eligibility and latest assessment period.
- Review relevant themes and gaps in public evidence with the teams responsible.
- Connect policies to implementation, performance data and corrective action.
- Use the research feedback process to identify omissions or inaccuracies supported by public sources.
- Describe membership with the index name and date, alongside a balanced account of progress and remaining problems.
These are suggested working steps, not an official admission checklist.
For small and medium enterprises (SMEs) supplying a listed company, the supply-chain themes help explain why customers may request environmental and labour information. The assessment model includes environmental and social supply-chain topics. See the model's theme structure.
Confirm the customer's requested period, business scope, units and evidence. Keep records behind your answers and label gaps honestly. Capital Markets Malaysia's Simplified ESG Disclosure Guide, national Version 2, July 2025, can help organise that work. Supplying a constituent does not transfer its membership or establish the supplier's financing eligibility.
For investors, use inclusion as a research input. Examine the company's finances, valuation, business risks and disclosures, and read any investment product's documents separately.