Integrating Environmental, Social, and Governance (ESG) Adoption in Malaysian Public Sector Projects

Abstract

Sustainable development is increasingly recognised by governments, which means integrating Environmental, Social, and Governance (ESG) frameworks into public projects is vital to ensuring government programs meet international sustainability benchmarks. The study aims to evaluate the current level of ESG understanding within government structures, identify barriers to its adoption, and investigate incentives that appeal to public servants and policymakers for adopting these practices. Insights into the obstacles and approaches to integrating ESG into the public sector were obtained using a mixed-methods design that included a questionnaire survey of 151 civil service personnel and 15 semi-structured interviews with government specialists. The results of the study indicate that, although some level of understanding of ESG frameworks exists, knowledge of social and governance aspects, especially the latter, is rather uncommon. Important institutional, financial, technical, and organisational constraints were also identified as major impediments to the adoption of ESG in the public sector. The study identifies the enabling conditions for wider ESG uptake, including policy alignment, collaboration across government agencies, capacity-building strategies, and comprehensive evaluation and feedback systems to address these challenges. The outcomes are important for addressing gaps in understanding and identifying the major factors that would facilitate deeper ESG integration. These findings are intended to spur further discussions to emphasise ESG factors within the governance framework and to position Malaysia’s public sector to contribute more meaningfully to sustainable development and social equity.