ESG remains a serious issue in the glove industry – Analysts
KUCHING: The environmental, social and governance (ESG) issue, in particular allegations of forced labor, remains a major concern in the glove industry.
In its update on the glove industry, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) summarized the imposition of a suspension of release order (WRO) by the 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 labor for Supermax Corporation Bhd (Supermax).
“We believe ESG remains a serious issue in the glove industry,” said MIDF Research.
“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 the Malaysian Rubber Glove Manufacturers Association (MARGMA).
“Furthermore, citing allegations of serious human rights abuses, Norway’s sovereign wealth fund has placed one of Malaysia’s medical glove manufacturers under surveillance for two years.”
Despite implementing a foreign worker management policy to improve its labor standards to meet International Labor Organization (ILO) criteria, the research arm believes there has been a gap in implementing the policies that led to its import bans in the United States and Canada.
“As a result, we have seen year-to-date exits of Supermax by overseas investors from January 2022.
“Similarly, during the same period, Kossan Rubber Industries Bhd has seen exits from foreign investors.
“On the other hand, we have seen entries since the beginning of the year in Top Glove Corporation Bhd and Hartalega Holdings Bhd, no doubt due to their initiatives to ensure good ESG compliance.