MALAYSIA’ S architecture, engineering, and construction( AEC) sector has entered a defining phase as environmental, social and governance( ESG) standards have become a non-negotiable part of doing business. What once served as a voluntary responsibility exercise has evolved into a defining business imperative, influencing how investors, financiers and project owners evaluate performance.
The pressure intensifies as Bursa Malaysia tightens sustainability reporting rules and as green financing gains traction globally. Companies without measurable ESG policies risk being sidelined from key funding opportunities and major tenders. Smaller construction and design firms, however, often struggle to turn ESG ideals into actionable,
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day-to-day practices.
TURNING POLICY INTO PRACTICE
“ ESG has become part of staying competitive, especially when it comes to tender requirements. But it doesn’ t have to be overwhelming— the key is to start small, identify gaps and build step by step,” said Knight Frank Malaysia Group Managing Director, Keith Ooi.
For many firms, the main struggle is in operationalising ESG.
To move forward, industry experts recommend firms adopt customised strategies instead of rigid frameworks. Tailored ESG integration, aligned with both local context and global standards such as the International Sustainability Standards Board( ISSB) and the Global Reporting Initiative( GRI), could make sustainability an advantage rather than an obligation. These
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strategies typically began with:
1. Baseline assessments and risk reviews – analysing ESG performance and identifying high-impact operational risks.
2. Drafting ESG and governance policies – setting clear internal guidelines to align all organisational levels.
3. Supporting tender compliance – ensuring adherence to rising ESG criteria in major project bids.
4. Building dashboards and tracking tools – using simple systems to measure and communicate progress effectively.
The sector also required focused efforts across the three ESG pillars:
Environmental: Reducing embodied carbon through low-carbon materials, efficient designs, waste recycling, and renewable energy in-
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tegration.
Social: Ensuring fair labour practices, safety training, and local community engagement.
Governance: Upholding ethical conduct through anti-bribery policies and responsible supply chain management.
“ Going through the process ourselves gave us a deeper understanding of the practical challenges businesses face. It reinforced our belief that ESG must be integrated into the way organisations actually work, not just how they report,” Ooi mentioned, underscoring what was stated in Knight Frank Malaysia’ s 2024 ESG Report.
Ooi added:“ ESG isn’ t a trend— it’ s a pathway to resilience and competitiveness. By making it practical and achievable, businesses can future-proof themselves while contributing positively to the wider built environment.”
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