Summary
The transformation of the moonscape area into Sunway City is a prime example of Sunway's ability to turn an ecological wasteland into a thriving and sustainable community. The company is committed to achieving a net-zero carbon emissions by 2050, with a checkpoint in 2030. To achieve this, it focuses on minimizing residual emissions by adopting energy-efficient operations and replacing dirty energy with cleaner alternatives. The company has taken several initiatives towards a low-carbon future including (i) development of the Bus Rapid Transit (BRT)-Sunway Line, Malaysia's first dedicated and elevated electric BRT system, (ii) investment in solar photovoltaic (PV) panels to generate 8,940 MWh of clean energy annually, (iii) JV with the Massachusetts Institute of Technology (MIT) to research on carbon capture, utilization, and storage technology at Sunway City Kuala Lumpur (SCKL), and (iv) developed an Internal Carbon Pricing framework at RM15 per tonne of carbon emitted above the threshold level. Further demonstration of its commitment to combating climate change, Sunway has become a member of Climate Governance Malaysia and an official supporter of the Task Force on Climate-related Financial Disclosures (TCFD) since 2021.
Sunway ’s ESG Evolution Journey
Sunway is a prominent conglomerate with a broad range of offerings catering to a diverse customer base that includes governments, multinational corporations, homebuyers, and travelers. By 2030, it plans to attain ‘sustainable development objectives’ that are aligned with the United Nations Sustainable Development Goals (UN-SDGs). Its commitment to tackle climate change and creating sustainable value is evident through several ESG accolades that were accorded to the company including: (i) top 15 percentile for its industry classification in the FTSE Russell ESG rating in Malaysia, and (ii) an ESG rating upgrade by MSCI from "BBB" to "A".
In 2015, Sunway embarked on its data collection journey, beginning with the most commonly available environmental data, energy consumption, water consumption, and waste generation from properties situated within SCKL. Sunway has collected and filtered data for each of its 13 business divisions across three public-listed companies, namely Sunway Bhd, Sunway REIT, and Sunway Construction Group Berhad, for each indicator of the ESG components. Using the ESG data collected, Sunway has established five goals; i) Transforming Portfolios to Low Carbon Sustainable Cities, ii) Advocating a Responsible Value Chain, iii) Developing a Safe, Equal and Dignified Workforce, iv) Investing in Community Inclusivity and, v) Respecting Ethical Principles. Established in 2017, the Sunway Group Sustainability Department (GSD) was formed to bolster Sunway's commitment to sustainable development. Before the creation of the department, a Sunway Smart and Sustainable City task force led the development of its sustainability framework. Additionally, it engaged the Jeffrey Sachs Center on Sustainable Development (JSC) to quantify its climate value-at-risk as part of its risk analysis. As for 2019, Sunway has operationalized the SDG agenda through six transformations (Refer Chart 1) to create coherence and synergy among the components of national plans to achieve the 2030 Agenda. In 2020, the Board Sustainability Committee was established to oversee critical ESG matters relevant to the company. In 2021, Sunway took a significant step towards integrating climate change and ESG-related key performance indicators into the remuneration of Senior Management, in line with the Malaysian Code on Corporate Governance (Refer to Chart 2).
Source: BIMB Securities Research - 5 May 2023
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