(From left) The Edge Malaysia chief commercial officer Sharon Teh, Pekat Group Bhd executive director Chin Soo Mau, Yinson Holdings Bhd head of corporate sustainability Renard Siew, UOB Malaysia country head of wholesale banking Andy Cheah and chief executive officer Ng Wei Wei, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz, The Edge Media Group publisher and group chief executive officer Datuk Ho Kay Tat, Ernst & Young Malaysia partner of climate change and sustainability Arina Kok, BMW Malaysia head of corporate communications and sustainability Sashi Ambihaipahan, as well as The Edge Malaysia editor of ESG Tan Zhai Yun and managing editor Anna Taing. (Photo by Suhaimi Yusuf/The Edge)

KUALA LUMPUR (July 12): Shifting to a low-carbon economy is not easy and requires substantial financial resources. Fortunately, many financial incentives and schemes have been introduced in Malaysia to help companies kick-start their transition, said speakers at The Edge Malaysia ESG Forum 2023 held at the Mandarin Oriental hotel, Kuala Lumpur.

“There's an intense pressure on businesses and industries to transition towards a lower carbon future. Companies that do not comply risk being cut out of supply chains and markets where consumers demand for more sustainable products,” said publisher and group chief executive officer of The Edge Media Group Datuk Ho Kay Tat in his opening remarks for the event, which was organised in collaboration with UOB Malaysia and BMW Group Malaysia.

The theme of the forum was “Financing for a green future”. Over 150 participants from various industries attended the event in person.

Ho’s message was echoed by UOB Malaysia CEO Ng Wei Wei. More than 60% of Malaysia’s trade partners and over 8,000 corporations globally had announced their net zero commitments by 2020, said Ng. The governments with climate targets are bound to enforce stricter environmental, social and governance (ESG) requirements. Malaysia’s exporting companies, subsequently, must ensure compliance.

“The first four brown sectors are increasingly having to ramp up their investments and efforts to transition to cleaner technologies. One key catalyst will be the sectoral decarbonisation pathways with clear timelines, milestones and supporting policies to support real economy players in these sectors,” said Ng. The financial sector also needs to continue playing its role to help green the economy, she added.

Greening the manufacturing sector in Malaysia is particularly important, since it contributes approximately 25% of the country’s gross domestic product and 15% of total employment in Malaysia, said Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz in his keynote speech.

To make Malaysia’s economy competitive and resilient, the government is preparing the New Industrial Master Plan 2030, which will be finalised by the end of August. It will adopt a mission-based approach, and one of the missions is to strive for a net zero future.

“Our strategy involves one, establishing clear pathways to assist industries to decarbonise, sector by sector, and two, assisting Malaysian companies, small and medium enterprises (SMEs) in particular, to transition to renewable energy, and three, catalysing new, green growth areas to provide fresh opportunities for industries,” said Tengku Zafrul. The fourth strategy is to encourage the shift towards green infrastructure and the circular economy.

A national industry ESG framework for the manufacturing sector is expected to be launched by year end, he added. It will provide clear guidelines to manufacturing companies to improve their ESG practices.

Understanding trends and targeting low-hanging fruits

Sustainable financing is critical in incentivising decarbonisation, said Arina Kok, a partner of climate change and sustainability at Ernst & Young Malaysia, in her presentation titled “Regulations and developments on sustainable finance”.

Much of sustainable financing is currently going towards green buildings and renewable energy, Kok added. Going forward, there could be more financing opportunities in waste, pollution and the circular economy.

“We need to take a deeper dive into the value chain, and look at how we can actually drive financing down the value chain,” she said.

Support must be given to SMEs, since they are the backbone of the economy, added Andy Cheah, the country head of wholesale banking at UOB Malaysia in his presentation “Financing the sustainability agenda”.

He emphasised how SMEs need to take steps to build awareness and knowledge in their sustainability journey.

“We are currently developing a sustainability programme through our FinLab initiative to train and hand-hold SMEs through their first steps and alleviate anxieties. We aim to launch this later this year,” said Cheah.

One of the first things that companies can do in their transition journey is by adopting solar photovoltaic (PV) systems, said Chin Soo Mau, the executive director of Pekat Group Bhd, in his presentation on “Solar, a low-hanging fruit”.

“The installation is easy and fast, coupled with a fast payback period with a high return on investment. Cost-wise, installing solar panels has long-term benefits and cost savings, which outweigh the initial investment. For a tropical country like Malaysia, solar PV systems are low-maintenance and benefit from frequent rain to naturally clean off dust and debris,” said Chin.

During the fireside chat session, Renard Siew, the head of corporate sustainability of Yinson Holdings Bhd, suggested that smaller businesses can start the journey by identifying the top sustainability issues they want to prioritise. Once they do, they can integrate relevant practices into their day-to-day business operations.

He added that kick-starting one’s sustainability journey is not always about cost, but it also involves creative ideas and innovation, which could enhance the branding of the company.

“The return on investment could come in intangible forms,” said Siew. “There’s all this branding and reputational aspects that are not necessarily directly quantifiable in dollars and cents.”

Sashi Ambihaipahan, the head of corporate communications and sustainability at BMW Malaysia, said micro enterprises and SMEs have no choice but tackle sustainability head on, as the trend will not be reversed.

“The regulations around the world are moving towards fixing these [sustainability] challenges,” said Sashi. However, the good news is that prices of the products and services, such as solar panels, that could help MSMEs kick-start their sustainability journey have also been falling, he added.