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OPINION @ green | January-February . 2025

High electricity consumption firms required to commit to a gradual carbon reduction plan to avoid penalties

BY BEN ONG ,

Founder & Chairman Malaysian Association of Public Advocacy for Nature ( MAPAN )

The 16 PIKAS Malaysian sustainability policies :

• Malaysia MADANI

• Ekonomi MADANI

• 12th Malaysia Plan

• National Integrated Water Resources Management

• New Industrial Master Plan 2030

• National Transport Policy 2019-2030

• Communications and Multimedia Blueprint 2018- 2025

• Sustainable development goals

• Malaysia Digital Economy

• Malaysia Education Blueprint 2013-2025

• Green Technology Master Plan Malaysia 2017-2030

• National Energy Policy 2022- 2040

• National Security Policy 2021-2025

• National Agrofood Policy 2021-2030

• National Energy Transition Roadmap

• National Construction Policy 2023

The logical climate action is cost-effective and time-efficient decarbonisation using the public-private partnership architecture enshrined in the Public-Private Partnership Master Plan ( PIKAS ) 2030 .

INITIATIVES BEGINNING IN 2025

The enforcement of the Energy Efficiency & Conservation Act ( EECA ) 2023 started in January 2025 , with high electricity consumption firms required to commit to a gradual carbon reduction plan to avoid penalties .

The Securities Commission Malaysia announced that ‘ A Guide for Board ’ will be launched on National Sustainability Reporting Frameworks ( NSRF ) under its toolkit of the PACE ( Policy , Assumptions , Calculators , and Education ) approach .

By the way , NSRF is applicable for companies with RM2 billion turnover as of 2025 , and the cascading effect on SMEs is accurate due to Scope 3 supply chain carbon emissions .

Reportedly , the Ministry of Economy is finalising the National ESG Strategic Plan , which aims to provide a supportive framework with eco-friendly sustainability foundations for ESG adoption by all vibrant Malaysian businesses .

Meanwhile , Bursa Malaysia advertised for the hiring of Group Sustainability personnel .

One of the drivers of decarbonisation is credible ESG reporting that is consistent and comparable to international standards . The NSRF provided a globalrated report that is free of potential greenwashing for Malaysia to achieve its 45 per cent CO2 reduction , as stated in the Nationally Determined Contribution ( NDC ).

Malaysia ’ s NDC is a means to coordinate all parties under a whole-of-nation collaboration whereby each stakeholder in the ecosystem is supporting the ‘ just transition ’ of MSMEs for a low-carbon economy .

According to the Department of Statistics Malaysia , there were 96.9 % or 1,101,725 firms of MSME in Malaysia , with 69.7 per cent micro-enterprises and 83.9 per cent in the services sector , as of 2023 .

Since global ESG reporting standards accounted for Scopes 1 to 3 of carbon emissions , without MSMEs adopting ESG practices , it is difficult for large corporations to achieve full ESG compliance .

ETHICAL ESG PRINCIPLES

Multi-dimensional avenues of addressing decarbonisation are the way forward . Rating published sustainability reports by Bursa Malaysia and independent agencies like MSCI improve the acts of industry peers to mimic ethical ESG principles .

Regulations by the Ministry of Housing and Local Government ( KPKT ) and guidelines by the Malaysian Communications and Multimedia Commission ( MCMC ) on Power Usage Effectiveness ( PUE ) and Water Usage Effectiveness ( WUE ) by data centres ( DCs ) are essential ESG benchmarks .

The green economy relies on lowcarbon digitisation . Thus , besides Carbon Usage Effectiveness ( CUE ) for DCs to minimise emissions , PUE and WUE are ecological protection of scarce resources for Malaysia to become a high-wage nation with increased foreign direct investments .

Modular DC containers powered by Solar PV and Battery Energy Storage System ( BESS ) from Huawei Digital , for instance , are clean innovations . Industry has realised that solar power stored through BESS reduces carbon emission and energy consumption while keeping production running 365 days on 24-hour basis continuously .

THE TRUMP ADMINISTRATION

The carbon credits traded on the Bursa Carbon Exchange ( BCX ) - whether Renewable Energy Certificates ( RECs ) or nature-based and technology-based - are options for decarbonisation . Recognition is due to the existence of BCX , the world ’ s first Shariah-compliant multi-environmental product exchange , which is home-based for Malaysian ESG warriors .

The Donald Trump administration has declared the withdrawal from the Paris Agreement . More oil and gas fossil projects will be heightened to make the USA great again .

Against this background , the ESG movements in Malaysia are feathers in the cap for Malaysian entrepreneurs in future-proofing their ventures . In January 2026 , the European Union will impose a carbon tax through CBAM .

By then , Malaysia ’ s carbon tax regime , backed by the proposed National Anti-Climate Change Act , is expected . – ESG