• Gamuda has established the ‘Gamuda Green Plan (GGP) 2025’to drive ESG practices within the Group. The GGP 2025 is organized around four pillars, namely; i) Sustainable planning and design for construction, ii) Our Community and Our Business, iii) Environmental and Biodiversity Conservation, and iv) Enhancing Sustainability via Digitalisation. To embrace the circular construction, Gamuda has put forward a plan with specific actions to cut down both direct and indirect corporate greenhouse gas emission by 30% in 2025 and 45% in 2030.

• The company established Group Sustainability Framework "Build Right. For Life" in 2019, and hence we assess their ESG initiatives from 2019 until the latest available annual report (2021).

• Over the next five financial years, Gamuda has set aside RM2bn to invest in businesses related to renewable energy (RE), equivalent to circa 4% of topline.

• No disclosure however on the total ESG expenditure for the group

• We have assigned Gamuda an overall ESG rating of 4.3 out of 5 which falls in the rating band of “Best”.

• Gamuda is a BUY with unchanged SOP-derived TP of RM4.76

“Build Right. For Life” Gamuda has aligned their sustainability framework, "Build Right. For Life," with Sustainable Development Goals of the United Nations (UN SDGs) and pledged to conduct their business sustainably by addressing climate change and carbon emissions. GGP 2025 which includes four pillars (Refer Chart 2), developed with consideration of their business model, geographic location, and stakeholder interests. The plan includes specific targets and goals for the next four years and beyond, with a commitment to circular construction and reducing corporate greenhouse gas emissions intensity by 30% in 2025 and 45% in 2030. Initiatives taken to accelerate the target among others by growing its renewable energy asset portfolio to over 800MW, investing in solar and hydropower and involved in green financing programs, including nature-based and technology-based carbon reduction projects. Gamuda is also building their carbon credits by planting trees, having already planted over 600,000 trees and saplings, and aims to plant 1mn trees and saplings by 2023. Gamuda has been assessed by the Dow Jones Sustainability Indices for 4th consecutive year and has a S&P Global ESG score of 41, compared to the global construction and engineering industry average of 21. They spend 99% of their budget on local suppliers and have committed to Net Zero by 2050 through Science Based Targets initiative (SBTi), making them among the first companies in Malaysia's construction and engineering sector to do so. They are also an official supporter of Task Force on Climate-related Financial Disclosures (TCFD).

Longstanding Commitment to ESG Practices

Gamuda ESG practices dated back in the early 2000s, when it began focusing on sustainable construction practices. The flagship project, the Stormwater Management and Road Tunnel (SMART), is a prime example of their commitment to climate mitigation. The SMART system helps prevent floods and reduce emissions from traffic, demonstrating efforts of making positive impact on both the environmental and society. In 2017, Gamuda established Yayasan Gamuda foundation to promote education, environmental conservation, and community development. Through the foundation, it empowered marginalized communities by providing education and training opportunities, scholarships, and engagement with the Orang Asli. Gamuda signed the United Nations Global Compact in 2018 and published its first Integrated Annual Report in 2019. In recent years, Gamuda has continued to enhance its ESG practices, including setting a target to be a net-zero carbon organisation by 2050, implementing an IoT system to enhance emissions monitoring and reporting, and providing ESG training to over 3,000 supply chain partners.

Source: BIMB Securities Research - 5 May 2023