Local And Global ESG News | November 2024 Roundup

In the past month, many new regulations and acts concerning ESG have come into force in Malaysia and worldwide. Here is a brief roundup of the local and global ESG news from November 2024.

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Malaysia

Energy Efficiency and Conservation Act (EECA)

Malaysia gazetted the Energy Efficiency and Conservation Act 2024 on November 26, aiming to enhance energy efficiency across various sectors.

This act expands energy management requirements to multiple energy types and initially focuses on large consumers. Businesses are encouraged to integrate these measures into their sustainability strategies, aligning with global ESG compliance trends.

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ASEAN Interconnected Sustainability Ecosystem (ASEAN-ISE)

Bursa Malaysia collaborated with regional exchanges to launch the ASEAN-ISE, promoting unified ESG reporting standards across ASEAN.

The ASEAN Interconnected Sustainability Ecosystem (ASEAN-ISE) initiative is advancing with plans for a centralised ESG data infrastructure to streamline data collection and reporting across the region. At a recent workshop in Kuala Lumpur, key exchanges, including Bursa Malaysia and SGX (Singapore's Exchange), discussed a Request for Information (RFI) to identify suitable solutions. This infrastructure aims to align ESG practices, promote sustainable investments, and position ASEAN as a competitive, unified market for global green economy partnerships.

The initiative seeks to enhance resource efficiency, attract international investors, and foster innovation by harmonising data standards. It aligns regional priorities with global sustainability goals, emphasising market accessibility through an ESG lens. The framework's outcomes aim to increase corporate visibility, market integration, and ASEAN's appeal as a hub for sustainable development. Further details on the RFI will be released in December 2024.

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ESGpedia and Maybank team up for SMEs

Maybank has launched the myimpact SME initiative to support small and medium enterprises (SMEs) in their sustainability journeys across Singapore, Malaysia, Indonesia, the Philippines, and Cambodia. The program offers tailored financial and advisory solutions to help SMEs adopt sustainable practices, including tools for carbon emission tracking and ESG reporting through a partnership with ESGpedia.

The initiative also includes HERpower, targeting women entrepreneurs with specific benefits like loan fee waivers and networking opportunities, aligning with Maybank's commitment to inclusive and sustainable economic growth.

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MAMG Alpha Capital & Income Opportunities fund launched

Fidelity International and Maybank Asset Management launched the MAMG Alpha Capital & Income Opportunities fund in Malaysia to deliver income and capital growth through diversified multi-asset investments.

This fund builds on a similar initiative introduced in Singapore. It leverages global expertise to provide tailored solutions for Maybank clients. It is designed to perform across various market cycles while enhancing wealth protection.

The fund marks a significant step in Maybank's partnership strategy, focusing on innovative investment opportunities. It is exclusively available to Maybank clients, showcasing their commitment to client-focused financial products.

Hong Leong launches green financing and bonds

Hong Leong Financial Group introduced a Sustainable Finance Framework (SFF) to mobilise RM20 billion over five years, targeting green projects like renewable energy and waste management. Its investment bank also facilitated RM900 million in sustainability-linked bonds and green notes in Q1 FY2024/25. These efforts underscore the group's ESG commitment.

Financially, the group reported strong growth for Q1 FY2024/25, with net profit up 13.81% year-on-year to RM1.27 billion. Enhanced commercial banking, insurance performance, and increased non-interest income contributed to earnings per share rising to 74.7 sen from 65.4 sen a year prior.

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Malaysia and South Korea collaborating on ESG

Malaysia and South Korea have committed to strengthening cooperation in environmental, social, and governance (ESG) investments and technological collaboration. During a bilateral meeting between Prime Minister Anwar Ibrahim and President Yoon Suk Yeol, both nations emphasised the importance of R&D initiatives, focusing on areas such as the digital economy, the green agenda, and Fourth Industrial Revolution technologies. They also agreed to expedite the Free Trade Agreement (FTA) negotiations, aiming for completion by 2025.

The partnership supports small and medium enterprises (SMEs) and fosters innovation through collaborations in digital government, ICT, and emerging sectors. Both nations highlighted the significance of enhancing economic security, digital cooperation, and ICT integration, particularly in 5G, AI, and Big Data, further promoting sustainable economic growth.

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Recycling to the forefront of MK Land Holdings Berhad's ESG plans

MK Land Holdings Berhad has launched a recycling campaign to enhance its environmental, social, and governance (ESG) initiatives, reinforcing its commitment to sustainable practices. The campaign, held at its resorts, focuses on educating the public on recycling and fostering greater awareness of environmental issues. This initiative is part of the company’s ongoing efforts to integrate sustainability into its operations and contribute positively to the community, reflecting a broader commitment to corporate responsibility.

The campaign aligns with MK Land’s strategy of embedding ESG principles within its corporate culture, mainly through environmental stewardship. By engaging employees and local communities in recycling efforts, the company aims to reduce waste and promote sustainability. This move also complements MK Land’s broader goals of driving social and environmental change through its business practices, furthering its contributions to Malaysia’s sustainable development goals.

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KRI report states that Malaysia is powering ahead with climate policies

Malaysia's climate policies are being recognised for their ambitious approach, which is seen as "punching above its weight" given the country's emissions profile and level of development. The Khazanah Research Institute (KRI) report pointed out that Malaysia's climate targets are relatively advanced compared to its peers, particularly in the energy, agriculture, and sustainable infrastructure sectors.

Despite the challenges of achieving these targets, the country’s efforts have garnered attention for pushing forward with ambitious goals, particularly in its renewable energy transition, green economy, and sustainable agriculture.

The report also notes the tension between policy ambition and the realities of economic growth as businesses and industries seek support for implementing green policies. Critics warn that there is a need for more balanced approaches to ensure that sustainability goals do not undermine economic competitiveness. The government is encouraged to keep pushing for effective climate strategies while addressing concerns related to implementation challenges, such as affordability and technological readiness, to avoid stalling sustainable development momentum.

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Bursa Malaysia's CSI platform wins recognition

Bursa Malaysia was awarded the "ESG Industry Collaboration of the Year" at the 7th Regulation Asia Awards for Excellence 2024 for its Centralised Sustainability Intelligence (CSI) platform, a tool designed to enhance Environmental, Social, and Governance (ESG) practices across Malaysian companies. This recognition underscores the platform’s role in facilitating improved ESG reporting and enabling companies to assess their carbon emissions.

The CSI platform aligns with local and global standards, helping businesses access sustainable financing while improving their competitive edge globally. It supports both publicly listed companies (PLCs) and non-listed small and medium enterprises (SMEs), contributing to Malaysia's broader sustainability efforts.

The CSI platform, launched as part of Bursa Malaysia’s strategic push to streamline ESG integration, is already being adopted by companies in key manufacturing, logistics, and automotive sectors. The platform's alignment with frameworks like the IFRS Sustainability Disclosure Standards and the Greenhouse Gas Protocol ensures transparency, which enhances market vibrancy and attracts ethical investment. Additionally, it provides companies with preferential financing rates through participating banks, supporting their decarbonisation and sustainable growth initiatives. The initiative contributes to Malaysia's New Industrial Master Plan (NIMP) 2030 and positions local firms for better access to global markets.

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ASTRI and FMM collaborate on digital transformation

The Hong Kong Applied Science and Technology Research Institute (ASTRI) and the Federation of Malaysian Manufacturers (FMM) have signed a Memorandum of Understanding (MoU) to support the adoption of smart manufacturing technologies in Malaysia.

The collaboration, formalised on November 8, 2024, aims to assist Malaysian manufacturers, particularly SMEs, in their digital transformation efforts. By integrating ASTRI's advanced technologies, the partnership focuses on improving operational efficiency and embracing Industry 4.0 innovations. The MoU outlines initiatives such as promoting smart manufacturing technology development, facilitating business matching, and engaging in joint research and development projects.

This partnership aligns with Malaysia's New Industrial Master Plan 2030 (NIMP 2030), which emphasises boosting industrial capacity and resilience through technology-driven growth. A key goal is to elevate Malaysia's manufacturing sector, particularly SMEs, by enhancing productivity, reducing dependence on low-skilled labour, and incorporating environmental, social, and governance (ESG) considerations. The collaboration will also include knowledge-sharing events, focusing on key trends like IoT and help build technical skills among Malaysian manufacturers.

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Global

ESG regulations in the EU to be streamlined

The European Commission plans to streamline ESG regulations to address concerns that excessive rules undermine industry competitiveness. The shift comes after warnings about the EU's economic competitiveness with the US and China, with a focus on simplifying existing frameworks, including the Corporate Sustainability Reporting Directive and Taxonomy Regulation.

While some industries welcome this move, asset managers caution against deregulation, which might reduce corporate transparency crucial for ESG investments. The Commission also aims to ensure that no new requirements are added to the current framework as EU member states struggle to implement existing regulations.

These updates reflect a growing emphasis on harmonised ESG frameworks, regulatory enforcement, and corporate accountability both regionally and globally.

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Postponement of EU Deforestation Regulation

The EU proposed a 12-month delay to the implementation of the Deforestation Regulation, which could now potentially start in December 2025. The regulation mandates that companies prove their products are free from deforestation, emphasising stricter supply chain due diligence.

ESG metrics increasingly important for US investors

Callan’s 2024 ESG survey shows a notable increase in the incorporation of environmental, social, and governance (ESG) factors by US institutional investors, with 38% of respondents integrating ESG into their investment decisions—up from 35% in 2022. Foundations lead in ESG adoption, with 61% incorporating such factors, while 92% have included ESG language in their investment policy statements. The survey highlights that 63% of investors align portfolios with organisational values, and 32% now prioritise diversity, equity, and inclusion in their ESG approach, nearly triple the previous figure from 2022.

Despite these gains, the survey also reveals that 49% of respondents who do not incorporate ESG factors cite the belief that non-financial considerations should not influence investment decisions. This reflects ongoing debates regarding the balance between ESG integration and financial performance, particularly amid federal regulatory uncertainties and politicisation of ESG issues. The results indicate that the investment community progressively embeds ESG considerations and emphasises maintaining financial integrity.

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Upcoming Events

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Introduction to ESG: From Concepts to Practical Application

10 December 2024 | Sabah Int. Convention Centre, Kota Kinabalu, Sabah

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Mastering ESG: Building Strategic Roadmaps for Sustainability

11 December 2024 | Sabah Int. Convention Centre, Kota Kinabalu, Sabah

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