Understanding the Dimension of Sustainability Development: by 1) Mr. Faroze Nadar, Executive Director, UN Global Compat Network Malaysia & Brunei, 2) Prof. Ong Kian Ming, Director Philosophy, Politics and Economics, Taylor’s Law School, and 3) Mr.Asfaazam Kasbani, Director, Naional SDG Centre, Ministry of Economy
i) A Paradigm Shift Towards Sustainability
In the realm of sustainability, businesses are experiencing a transformative shift by actively incorporating Environmental, Social, and Governance (ESG) principles into their models. This paradigm emphasizes value-based thinking, with leaders seamlessly integrating sustainability values into decision-making. An exemplary case, Press Metal Aluminium Holdings Berhad (Press Metal), illustrates how the adoption of ESG practices not only results in decreased taxes but also fosters the uptake of renewable energy, thereby bolstering competitiveness. As an example, Press Metal has established smelters in Sarawak powered by hydropower, a sustainable energy source. This strategic decision has significantly reduced the carbon footprint of the company's aluminum production, leading to the achievement of the Aluminium Stewardship Initiative Performance Standard certification for its smelters in Bintulu, Sarawak, and the extrusion facility in Guangdong, China. Notably, Press Metal recently secured the gold award in the industrial products and services category, as well as in the green transition sector at The Edge Malaysia ESG Awards 2023. Meanwhile, in examining the social dimension, companies like Thumbprints Utd. Sdn. Bhd (Thumbprints) and AME Elite Consortium Berhad (AME) demonstrate commitment to fair compensation, financial prudence, and innovative social responsibility. Thumbprints ensured 96% of its workforce received a minimum wage, while AME introduced merchant cards for foreign workers, promoting financial inclusion and enhancing safety.
ii) From Risk Resilience to Market Exploration
The integration of sustainability into business decisions is not merely advantageous but it can also be viewed as a defensive strategy. This strategic shift becomes particularly significant when considering the repercussions faced by companies that neglected ESG practices and encountered backlash. These instances serve as cautionary examples, prompting other businesses to proactively develop defensive strategies to prevent similar pitfalls. Furthermore, the incorporation of ESG values extends beyond risk mitigation as it can lead to the discovery of market opportunities. Companies may witness heightened innovation, as demonstrated by Malaysia's national oil and gas company, Petroliam Nasional Bhd (Petronas) through the establishment of Gentari Sdn Bhd (Gentari), a new entity focused on accelerating the adoption and commercialization of clean energy, showcases how embracing ESG principles fosters not only risk resilience but also a proactive exploration of emerging market trends.
Source: BIMB Securities Research - 12 Dec 2023