ESG | MARCH-APRIL , 2023
Making a difference for businesses
MAPAN ’ s training session exposes participants to the essentials of sustainability
BY FATIHAH MANAF
ENVIRONMENTAL , social , and governance ( ESG ) is a strategic framework that enables organisations to consider all stakeholders ’ needs and create value sustainably . It comprises three essential pillars companies use to measure their sustainability performance while conducting business .
On Mar 4 , 2023 , the Malaysian Association of Public Advocacy for Nature ( MAPAN ) organised a Get-to-know ESG Training at the Malaysia Institute for Supply Chain Innovation ( MISI ) in Shah Alam . The training aimed to give participants a good understanding of ESG and its importance in promoting sustainable business practices . It highlighted two topics in ESG - transportation and regulation .
The training featured three sessions by MAPAN founding members – MAPAN Chairman Ben Ong , M Ravi , an international human rights lawyer with ESG experience and Assoc Prof Dr Harlina Suzana Jaafar , Chairman of Technical Committee ( TC ) 10 Halal Supply Chain under the Standard Metrology Institute for Islamic Countries ( SMIIC ) and Islamic Standard Committee member at the Department of Standards Malaysia .
A NEW APPROACH FOR BUSINESSES
In the first session , Ben shared that MAPAN wanted to make a difference for businesses , especially micro , small and medium enterprises ( MSMEs ), concerning ESG . He noted that 97 per cent of the country ’ s business came from this segment .
BY PROF DATO DR AHMAD IBRAHIM TAN SRI OMAR Centre for STI Policy UCSI University
JUNE 5th is World Environment Day . It reminds the world of the urgency to care for the environment . Judging by the events over recent decades , few would disagree that the global environment is not in the best shape .
It has been badly ravaged , unfortunately , by us . In the name of development , we have bulldozed through projects that would compromise the environment . As a result , cases of environmental pollution have seen a disturbing rise .
Many rivers have been badly contaminated by industrial wastes , depriving us of clean water . Our air quality has seriously deteriorated in some places , turning them into health hazards .
The large tracts of arable land we once used to grow our food have become less productive because of overuse and neglect . Not to mention being polluted by such persistent organic pollutants , which is remedy-challenging .
Assoc . Prof . Dr Harlina Suzana Jaafar
Ben Ong
M Ravi
OPINION
Uniting and dividing the world
Now that we have reached an almost hopeless situation , we argue about how to revive best and return our environment to normalcy .
The UN has initiated many programmes to move the agenda to arrest the decline in global environmental health . We have the UN SDGs to guide international efforts to embrace sustainability . The UNFCCC , UN Framework Convention on Climate Change , is one instrument created to galvanise global actions to tackle the climate crisis .
There are many more other initiatives by the UN to address the issues of the environment . At home , we have also adopted roadmaps and blueprints to guide us . All our five-year plans pay close attention to the environmental challenge .
The 12th Malaysia Plan specifically singles out biomass , a potential environmental hazard , as a possible economic resource for the country to harness . Furthermore , in the quest for clean energy , the 12th Plan has identified hydrogen as one energy source we must invest in . For that matter , many countries worldwide have started the journey to embrace the hydrogen economy .
Speakers and participants of MAPAN ' s Get-to-know ESG training .
“ So , if a country is going to go for ESG compliance , 97 per cent are still sitting there . How to achieve Nett Zero ? Almost impossible . This percentage may only account for 23 per cent of our national GDP . There is an opinion that the country can produce the same GDP but go more eco . It relates to a lot of effort in the industries ,” said Ben .
He explained that ESG could be viewed as a form of behavioural science . People may become interested in ESG practices after reading an article or hearing about using recyclable materials and adopting a circular economy approach , which involves converting and reusing resources .
“ Waste minimisation is how everyone can play a role in this decarbonisation journey ,” he emphasised .
ESG-RELATED LAWS IN MALAYSIA
Presenting on ‘ ESG Regulations ’, Ravi shared with the training participants some laws and regulations in Malaysia that aligned with ESG principles .
“ The first regulation I want to share is on ESG and listed companies . The Malaysian Code of Corporate Governance ( MCCG ) was introduced in 2000 . Its update in 2021 presents the best practices and guidance to improve board supervision and incorporate sustainability factors into business strategy and operation .
“ It also has enhanced board procedures , such as director appointment , diversity and nomination . The promotion of best practices , especially those that were found to have comparatively lower adoption rates , was noted by the Securities Commission of Malaysia ’ s Corporate Governance Monitor report .”
Ravi also elaborated on some other regulations , including the Occupational Safety and Health Act 1994 ( Act 514 ), the Factories and Machinery Act 1967 ( Act 139 ),
Though environmental well-being is seen as an important agenda for the world , there is doubt that everyone demonstrates a full commitment to UN initiatives .
Take the issue of ocean plastics pollution . Despite all the evidence of waste plastics destroying ocean life , there is no let up in the indiscriminate throwing away of single-use plastics .
The call to separate plastics at source for recycling has fallen on deaf ears . Changing people ’ s behaviour remains a significant challenge . We saw the same frustration controlling the pandemic . So much for the public commitment to tackling environmental woes .
Countries also are not fully committed , as is evidenced by the widespread flouting of the pledges made to reduce carbon emissions . There are countries which use the environmental argument to deny market access .
A good example is the policy to deny palm biodiesel access to the EU market , which goes against the spirit of engagement and collaboration .
The good news is that more people now recognise the environment and nature as strategic capital for the world economy . Dubbed natural capitalism , countries now realise that the environment should be accorded similar ,
Local Government Act 1976 ( Act 171 ), the National Forestry Act 1984 , etc .
He reminded greenwashing represented a significant ESG risk , an issue that was also observed in Singapore .
TACKLING ESG THROUGH THE SUPPLY CHAIN
In her presentation titled ‘ ESG Transportation ’, Harlina discussed various methods for measuring ESG performance , emphasising that most ESG performance metrics focus on environmental factors .
“ We cannot deny the role of logistics and supply chain in the globalised business environment contributing to global trade . But at the same time , logistics and supply chains are also blamed for contributing to environmental depletion .
“ They can contribute to traffic congestion and emissions of CO2 and other pollutants . From an Eastern European perspective , they are growing concerned about becoming ‘ lean and green ’. There is some evidence of social misconduct within their operations .” Based on her study on halal logistics , Harlina said the quickest way to apply halal or green on something was through the supply chain .
“ Logistics companies increasingly incorporate corporate social responsibility ( CSR ) within their operations , and there is an increasing trend towards sustainability reporting among the logistics companies .”
She then touched on the Sustainability Accounting Standards Board ( SASB ) standards for road transportation , which include :
• Greenhouse gas emissions
• Air quality
• Driver working conditions
• Accident and safety management “ The use of SASB standards is meant to communicate to investors regarding sustainability issues that will likely impact the corporate ability to create value over the long term .”
She noted that sustainability reporting in the logistics sector focused on environmental indicators but lacked social sustainability indicators , especially from a global perspective . – @ ESG
if not better , treatment than the traditional growth capitals of land , labour , finance and technology .
Like the other assets , the natural capital equally requires replenishing to stay robust . More and more businesses are embracing the ESG monitoring and reporting mandate , reflecting their increased environmental commitment . This is important since the business sector is the one which has impacted the environment the most .
The issue of the environment has indeed united the world in some ways . Many countries have now come together to fight the potential hazards of climate change , a major environmental threat . Many are taking steps to reduce their carbon emissions .
However , the world is divided on the best way to achieve that . Some die-hard environmentalists and well-informed scientists call for a total boycott of fossil energy . But fossil fuel-dependent businesses would not budge from their position .
The only way out of the fracas is to strive for a balance between emission and capture . Net zero is the compromise that would hopefully unite the world to resolve the environmental malaise . Otherwise , the divide will continue with no realistic end in sight . – @ ESG