ESG | MARCH-APRIL , 2023

BY DANIAL FAUZI

Prof Lim Weng Marc , Dean of Sunway Business School , Sunway University Malaysia said that after the Covid-19 pandemic nearly crippled some countries , the state of the world worsened after borders were reopened . He remarked that the primary evidence of this issue stemmed from the global poverty rate that had increased for the first time in 20 years , with more than 700 million people in poverty when the pandemic struck .

The second piece of evidence is the health of the planet . The planet is unhealthy even though human activity was at a standstill in early 2020 when the pandemic hit .

Lim said Bursa Malaysia recently established new mechanism standards for companies to prepare ESG reports . The evidence is through a company ’ s Corporate Social Responsibility ( CSR ) report .

The gist is that when a company can utilise its profits for CSR , it can be considered a clear signal that it is profitable . Investors would then be more inclined to invest in that company . In a way , ESG is akin to CSR , except that ESG touches on environmental , social and governing compliances .

Lim was speaking at a recent forum titled “ ESG Solutions : Collaborating for a Sustainable Future Sunway-MAPAN Sustainability Plenary ” organised by Sunway University . The talk addressed the impacts of climate change on the economy , markets , people and society . It was aimed at finding solutions to the issues through concrete and collaborative actions by researchers , practitioners and the community .

The forum was the first in a series of lectures / workshops / seminars to engage the research community , industry , and regulators , including prospective postgraduates , to deliberate on solutions to address ESG concerns with a critical focus on Small and Medium-sized Enterprises ( SMEs ). SMEs play a crucial role in Malaysia ’ s economy and face unique challenges in addressing ESG concerns .

Lim said that ESG should transcend beyond just being compliant . “ ESG could be considered an investment rather than a cost with the idea of merging ESG with PQM ( Price Quality Method ). Companies can report on their ESG activities , with ESG activities being an indicator of how well they are doing ,” he said .

STRIKING AT THE ROOT CAUSE

Ong Pang Yen , Executive Director of the Chairman ’ s Office at Sunway Group

Prof Lim Weng Marc

Ong Pang Yen

COLUMN

Malaysia , attested to Lim ’ s sentiment . He said there were only two reasons ESG had recently gained traction despite being introduced in 2005 .

The first was due to the Paris Climate Agreement in 2015 , followed by the rollout of the United Nations SDGs

BY BEN ONG Chairman MAPAN ( Malaysian Association of Public Advocacy for Nature )

THE SUN reported on Mar 14 , 2023 that the Ministry of Natural Resources , Environment and Climate Change ( KeTSA ) had identified critical sectors of energy , processing and product use industries , agriculture , land use , land use change and forestry for greenhouse gas ( GHG ) emission reduction .

This aside , for Malaysia to fulfil its Nationally Determined Contributions ( NDC ) of 45 per cent of the gross domestic product ( GDP ) in 2030 , the following measures are pertinent : A grace period of at least five years for Micro , Small and Medium Enterprises ( MSMEs ) to shift to the low carbon economy

( Sustainable Development Goals ) to focus on social issues plaguing the world .

It is no myth that climate change is real and can severely impact the planet . Ong explained that Earth could naturally absorb 18 billion tonnes of CO2 ( carbon dioxide ) gasses through the oceans , lush jungles , forests , and soil .

However , with the start of the industrial revolution and the development of steam engines , the volume of CO2 gases steadily increased , explaining the rise in global temperatures and the volatility of weather patterns .

Additionally , in the modern era , the industrial sector emits about 40 billion tonnes of CO2 a year , resulting in 22 billion tonnes of CO2 gasses not being absorbed by the Earth , cultivating the greenhouse effect on the planet .

The Earth can only tolerate another 400 billion tonnes before the planet

Environmental , Social and Governance ( ESG ) compliance is a process improvement and a risk management exercise that takes time to perfect . Data collection is tedious , and MSMEs must re-organise their daily operations to satisfy new requirements . Public-listed companies ( PLCs ) on Bursa Malaysia to be all FTSE4Good-certified before 2025 With all the PLCs certified ESG , service providers , contractors and vendors ( who are responsible for Scope 3 emission accounting ) will be commercially motivated to meet ESG practices to maintain their businesses . Bursa Malaysia and the Securities Commission are to make this ESG priority their regulatory mission . Mandatory ‘ Malaysian ESG Standard for MSMEs ’ ( MESG ) or equivalent latest by 2025 MSMEs accounted for nearly 97 per cent