Ramssol Group Bhd is taking significant strides in its environmental, social and governance (ESG) journey, with expectations for improved disclosures soon. Maybank Investment Bank Bhd has maintained a BUY call for the company, reiterating a target price of RM1, which is based on a 17 times price-to-earnings ratio for fiscal year 2025 (FY25). This target reflects a potential upside of 69% from the current share price of RM0.59.

In its recent ESG assessment, Ramssol achieved an overall score of 53 out of 100, which indicates room for improvement. The company's quantitative metrics received a score of 31, while its qualitative assessment was rated at 50. Notably, Ramssol excelled in ESG target-setting, scoring a perfect 100.

The company's environmental performance, however, remains a focus area, as it only started tracking relevant metrics last year. To date, only Scope 1 and 2 emissions, along with energy usage data, have been disclosed.

Its management has committed to expanding this reporting to include additional environmental metrics such as waste and water management, starting in FY24. Furthermore, Ramssol plans to report its Scope 3 emissions data by FY26 and has established proactive targets for Scope 1 and 2 emissions by 2030, based on its 2023 baseline.

In terms of social performance, Ramssol's score was average, reflecting positive developments such as an increase in the representation of women in managerial positions — 46% in FY23 compared to 17% in FY21. Additionally, the company's spending on local suppliers has risen significantly, now standing at 99% compared to 80% in FY21. Enhanced tracking of employee training hours and customer satisfaction metrics is anticipated to bolster its social score in the future.

Management has also set clear targets for training and development by 2025, including mandatory minimum training hours for all staff and specific training in occupational safety and health.

Governance indicators presented a mixed picture for Ramssol. While the company has maintained an impeccable record regarding cyber security breaches and has ensured that independent board representation exceeds 50% since FY21, the compensation ratios for its managing director and board members were considerably higher than the industry average, at 13% and 24% of reported net profit, respectively, in FY23. Improving female representation on the board, which was 29% in FY23, could enhance Ramssol's governance score moving forward.