Permodalan Nasional Berhad’s (PNB) mission to help the Malaysian government strengthen the nation’s economy is part of the Government-linked Enterprise Activation and Reform Programme (GEAR-uP), which operates under the all-encompassing Madani Economy: Empowering the People framework.[/caption]

Investing in people lays the foundation for shared prosperity and a better, brighter future for everyone

THE timeless adage “a rising tide lifts all boats” speaks volumes about the power of collective growth and prosperity. Popularised by John F. Kennedy, this aphorism suggests that investing in economic development can benefit everyone who participates in the economy.

Thus, governments often focus on developing physical capital – power, roads, bridges, airports, and other infrastructure – to advance economic growth. Yet, under-invest in people, as the benefits are often slower to materialise and harder to measure.

Recognising this, Permodalan Nasional Berhad (PNB) has embarked on a mission to help the Malaysian government strengthen the nation’s economy across various sectors through a range of programmes and initiatives—many of which prioritise people as part of its commitment to Malaysia, as well as environmental, social, and governance (ESG) issues.

These efforts are in line with the Government-linked Enterprise Activation and Reform Programme (GEAR-uP), which operates under the all-encompassing Madani Economy: Empowering the People framework.

Aligned with its sacred mandate, to enhance the economic wealth of the Bumiputera community and all Malaysians, for the prosperity of the nation, the GEAR-uP initiative strengthens PNB’s refreshed purpose, to uplift the financial lives of Malaysians across generations.

The government-linked investment company (GLIC), along with five other GLICs – Khazanah Nasional Berhad (Khazanah), the Employees Provident Fund (EPF), Kumpulan Wang Persaraan (Diperbadankan) (KWAP), Lembaga Tabung Haji, and Lembaga Tabung Angkatan Tentera (LTAT) – is equally involved in “Raising the Floor,” with the objective of elevating the quality of life for the rakyat through fair and decent income, equal opportunities for all.

PNB actively supports the Madani Economy framework by introducing the right policies in place that ensure a safe and comfortable working environment, providing meaningful wages for all Malaysians, implementing a progressive wage model with opportunities for career growth and upskilling, and promoting equality and inclusion, which are embedded into ESG framework and commitments that were launched in April 2022.

Furthermore, its ten ESG commitments encompass both enterprise operations and investment stewardship, with an enhanced focus on sustainability, including a stronger emphasis on addressing climate, labour, and biodiversity issues.

PNB is one of the big five government investment-linked funds, overseeing assets exceeding RM300 bil as of December 2023.

The fund was established as a vehicle to raise Bumiputera equity and companies, a key initiative of the New Economic Policy (NEP) introduced by the country’s second prime minister, Tun Abdul Razak.

PNB’s subsidiary, Amanah Saham Nasional Berhad, is currently Malaysia’s largest Bumiputera unit trust management firm, managing 18 unit trust funds with units in circulation (UIC) of approximately 280 billion units over 15 million accounts.

Championing workers’ justice

Feeling appreciated is an important aspect of daily life. When workers are valued, productivity increases, leading to lower turnover rates and enhanced business efficiency.

“Empowering employees and encouraging ethical practices, labour rights contribute to a healthier, more equitable society overall,” said PNB chief investment officer (private & strategic investments) Datuk Rick Ramli.

Proactively aligning with its Labour Rights Policy (Commitment #5) within its Sustainability Framework and the national agenda, the leading investment company emphasises the well-being of employees and fosters a culture of accountability and ethical practices among its investee companies and suppliers.

Committing to fair working conditions and respecting fundamental rights, PNB recognises that labour rights issues can pose significant risks to operations and long-term viability.

PNB operationalised its Labour Rights Policy in December 2022, mandating investee companies to establish or refine their own labour rights policies within two years, ensuring alignment with PNB’s standards.

Building upon efforts in publishing a Labour Rights Policy in 2022, PNB operationalised the policy through two ways: conducting labour rights survey as well as engagements and site visits.PNB implemented controversy scanning through research to identify potential labour rights issues before engaging or visiting selected investee companies. These engagements were then geared towards understanding investee companies’ labour practices, unique risks and conveying our expectations effectively.

With respect to the Key Material Issues addressed in the Labour Rights Policy, many investee companies have made sufficient commitments and implemented initiatives related to upholding Labour/Human Rights. For example, Maybank recently published its own standalone Human Rights Policy early this year.

Through engagement and survey findings, PNB has activated its stewardship efforts by initiating conversations with investee companies, recommending areas for improvement, and providing these insights to relevant PNB Nominee Directors to support their oversight of labour rights management within their respective companies.

A comprehensive Labour Rights Survey in 2023 was conducted across various sectors to assess compliance with the policy’s six key material issues, which include forced and child labour, fair wages and benefits, diversity and inclusion, freedom of association, safety and health, upskilling and education.

Additional efforts by the GLIC include stakeholder engagement, strongly urging investee companies to collaborate with recruitment agents, suppliers, and relevant authorities to enhance labour management practices.

For companies without a Labour Rights Policy, PNB encourages the development of standalone policies that align with its own, while those with existing policies are urged to improve transparency regarding labour rights issues.

PNB will bridge national policies with its Labour Rights Policy while continuing to engage with investee companies.

It plans to review disclosures and sustainability reports to assess labour rights performance and utilise ESG ratings to inform stakeholders about investment decisions.

Through these initiatives, PNB aspires to create a more sustainable and equitable labour landscape in Malaysia, setting a benchmark for responsible business practices across various industries.

When introduced in August, the GEAR-uP programme entrusted the GLICs and Government-Linked Companies (GLCs) to go beyond capital investments and lead by impactful actions to improve the lives of employees in their organisations and ecosystems, including investee companies.

These include committing to ensure permanent Malaysian employees receive a total compensation equivalent to monthly living wages of RM3,100, and aligning future wage benchmarks with the EPF’s annual Belanjawanku report.

Belanjawanku is the Expenditure Guide for Malaysian Individuals and Families 2022/2023 launched by EPF, to provide estimations of minimum monthly expenditures on various types of goods and services for different households.

Just compensation

Fair remuneration boosts the economy by enhancing workers’ purchasing power. Employees with more disposable income stimulate demand and benefit local businesses, driving economic growth.

In addition to improving productivity and reducing turnover, fair compensation enhances employees’ value, boosts motivation, and fosters engagement.

This results in better performance and lower turnover, reducing recruitment costs while cultivating an experienced workforce.

Furthermore, minimising income inequality promotes social stability and consumer confidence. Overall, a more qualified workforce drives innovation and contributes to a healthier, more resilient economy.

To ensure its employees receive wages that meet their basic needs and enable a decent standard of living, PNB introduced its Living Wage Framework in 2023 as part of its commitment to social responsibility and employee well-being.

“Our commitment to an inclusive and equitable workplace is reflected in our Living Wage Framework, which guarantees fair compensation that covers basic needs.

“To ensure the framework remains relevant and competitive, we conduct benchmarking exercises on both salary and living wage to ensure that compensation aligns with current market trends,” said Rick.

He added that PNB provides comprehensive benefits and prioritises sustainable practices to support the long-term well-being of its employees.

The Living Wage Framework is built on key components designed to ensure fair compensation and employee well-being.

By leveraging external benchmarking, PNB established a baseline for living wages based on regional data, ensuring that compensation packages are competitive and equitable.

A holistic approach is taken by incorporating comprehensive benefits that enhance overall employee well-being.

Its commitment to sustainable practices means the framework will be continuously monitored and updated, aligning with reward philosophies and prevailing market trends.

Some investee companies have proactively taken their own steps to launch their living wage commitments.

For example on living wage, Sime Darby Property, for one, has embarked on a two-year roadmap to progressively improve the living wage for affected employees from 2022.

Meanwhile, SD Guthrie commits to a living wage aligned with the RSPO Principle and Criteria standards.

Maybank also strives to enable their workers to have a living wage by 2030.

Overall, prioritising a living wage has a profound positive impact on both employees and the community.

Reducing income inequality empowers workers to focus on their professional and personal lives, contributing to a positive work environment.

Elevating women

Empowering women is crucial for economic growth and development, enhancing productivity, driving innovation, and fostering more inclusive societies.

When women have equal access to education, employment, and resources, they can fully participate in the workforce, leading to increased economic output.

Independent and strong women tend to reinvest their earnings in their families and communities, promoting better health, education, and social stability.

Ultimately, gender equality is not just a moral imperative but an economic necessity that can significantly boost national economies and create sustainable development for future generations.

PNB’s conversation around equality and diversity is not just a checkbox but a heartfelt commitment to change.

As of 2023, the organisation proudly announced that women now occupy 36% of senior management roles, inching closer to its ambitious target of 40% by 2025.

This goal is part of Commitment #6, which aims to elevate women in leadership and transform the organisational landscape. The strides made reflect a significant dedication to gender equality, leading to a balanced workforce that not only meets but surpasses global standards.

“We understand that reaching the 40% target by next year will require ongoing effort and unwavering commitment from all levels of the organisation.

“At the core of our mission is the belief that diversity is a powerful driver of innovation and excellence.

“The organisation is passionate about creating an environment where women can thrive, fostering their growth and empowering them to reach their full potential.

“This dedication to inclusivity is not just about numbers; it’s about shaping a workplace where every voice is heard, valued, and encouraged to contribute to collective success,” said Rick.

He emphasised PNB’s steadfast commitment to fostering a gender-inclusive workplace and empowering women to reach their full potential.

“Our initiative, ‘Empowering Women for Shared Success,’ focuses on a three-pronged approach to enable women to thrive and contribute to our organisation’s achievements.

“By prioritising women’s development, we recognise the need for a robust leadership pipeline, developing a programme in 2023 aimed at equipping high-potential senior women leaders with essential skills for navigating complex challenges. This targeted training was launched in Q2 2024.“Expanding professional networks is another critical component of our strategy. We actively promote networking opportunities for women leaders, both within our organisation and with external partners.

“Collaborating with organisations like the 30% Club allows them to connect with mentors, share best practices, and gain insights from industry leaders.

“We also facilitate Best Practice Sharing sessions focused on important topics like ‘Women and Sustainability in Corporate’ and ‘Unconscious Bias.’

“Creating an enabling environment is vital for fostering women’s success. We offer flexible working options to support a healthy work-life balance and continually review our policies to ensure they are inclusive and aligned with industry benchmarks.

“By building supportive systems, we aim to empower women to excel in their careers and contribute to our collective success,” said Rick.

Legacy in the making

PNB is determined in fulfilling its commitment to enhance the financial well-being of its workforce, which in turn positively impacts the lives of employees, their families, and the communities served in the long-term.

By prioritising the financial upliftment of employees, it aims to create a ripple effect that strengthens societal well-being.

Moving forward, PNB will remain dedicated to promoting fair compensation, fostering diversity, and providing comprehensive development opportunities for its staff.

The organisation maintains that a diverse and well-supported workforce is essential for driving innovation and achieving sustainable growth.

PNB is set to conduct thorough due diligence to identify potential labour practice risks within its operations and supply chain.

By actively engaging with selected suppliers, PNB will ensure compliance with labour standards and encourage continuous improvement, fostering a culture of accountability and ethical practices throughout its partnerships. Through these efforts, PNB aims to build a more equitable and resilient community.