ESG | JANUARY-FEBRUARY , 2023

Malaysia is to achieve carbon neutrality by 2050 , a commitment signed under Paris Agreement in 2015 . The accounting sector generally felt that imposing the carbon tax to reduce carbon and increase national tax collection is a viable post Covid-19 fiscal policy .

Bursa Carbon Exchange ( BCX ), the world ’ s first Shariah-compliant voluntary carbon exchange , was launched on Dec 9 , 2022 , with the inaugural auction scheduled for March 2023 .

THE MADANI ASPIRATIONS

The fact that Sustainable Development Goals ( SDGs ) of the United Nations are the broad equivalents of ESG in qualitative terms , MADANI directly resembles No Poverty , Good Health and Well-being , Quality Education , Gender Equality , Affordable and Clean Energy , Decent Work and Economic Growth , Industry Innovation and Infrastructure , Reduced Inequalities , Sustainable Cities and Communities , Responsible Consumption and Production , Climate Action , Peace , Justice and Strong Institutions , and Partnerships for the Goals .

GREEN ECONOMY WITH LOW CARBON SUPPLY CHAIN

Transforming to a green economy requires long and short-term technologies , either nature-based solutions ( e . g . reforestation , circular economy , etc ) or CO2 capture and storage facilities , depending on the emission intensity .

There is growing concern that accounting for greenhouse gas ( GHG ) carbon footprint shall extend beyond Scopes 1 and 2 ( direct emission from firms production / service and indirect emission from energy purchased ) to

BY BEN ONG include supply chain , the key cause of Scope 3 emission which constitutes a significant proportion of commercial and industrial pollution from outsourced human and goods movement ( like those of GIG economy ).

FUNDRAISING AND INVESTMENT

Upfront investment is paramount since ESG is a business expense for long-term growth . Consumer activism will be more prevalent as ESG imposition matures .

Compliance with and reporting of ESG requirements under non-financial disclosure can be costly , especially to Micro , Small and Medium Enterprises ( MSME ), that happen to be vendors to ESG-compliant multinational and large corporations or public-listed and government-linked companies ( GLCs ).

Interim fundraising through banks or investment by green funds is thus essential .

PRIVATE EFFORTS TO FUEL THE MADANI GOALS

The Malaysian government merged the Ministry of Natural Resources , Environment and Climate Change

( balancing between development and environmental conservation , as reported in Eco-Business on Dec 9 , 2022 ). It re-branded the Ministry of Local Government Development ( to revive the economy and alleviate people ’ s burden , as reported in Malay Mail on Jan 26 , 2023 ).

Water is the primary ESG resource in the streamlined Ministry of Natural Resources , facilitating forceful coordination and enforcement for climate action . To drop the word “ Housing ” from the Ministry of Local Government encourages sustainable development .

The wish is for the two intertwining ministries to jointly address global warming issues through interministerial carbon credit mechanism , leachate leakage and resolution of plastic waste at the landfill . And if economically feasible , to trap the methane gas as a renewable ( instead of polluting the air ).

The recent voluntary public survey ( VPS ) by the Malaysian Association of Public Advocacy for Nature ( MAPAN ) revealed that MSME need assistance with funding , standard , training and grace from the government and industry to adopt ESG practices .

The community service survey titled “ MSME Awareness of ESG ” encompasses five sections :

• ESG

• MSME

• Global ESG Standard

• ESG Compliance , and

• ESG Reporting . This VPS covers 10 of the 13 States in Malaysia , and Singapore , Indonesia , India , Bangladesh , Australia , Taiwan , Iraq and Sri Lanka ( https :// www . esg-mapan . org . my /).

As a follow-through to the finding of its VPS , MAPAN is actively involved in HRDF-approved ESG carbon reduction courses , online awareness sessions , competent persons for the sustainability programme , micro-credit , cooperative , Malaysian ESG Agenda , etc , to pacesetting the ESG movement in Malaysia .

Many non-government organisations ( NGOs ) are well-poised to professionally drive the ESG vehicles to make the adoption of ESG by Malaysian businesses less painful and much faster as MAPAN discovered in its course development that existing laws like the Companies Act and Federal Constitution actually bear roots to ESG implementation . – ESG

Ben Ong is chairman of MAPAN