Digital transformation meets sustainability: The rise of digital-ESG strategies
By Sonia Kumari Selvarajan.
Digitalisation and Environmental, Social, and Governance (ESG) considerations stand as two paramount pillars shaping the trajectory of countries and organisations on a global scale. As companies pivot towards a more ESG-centric approach, the role of digitalisation emerges as a key driver of sustainable business practices
Amid this transformative era, the Global Development Initiative (GDI) stands as a global force for progress. With development as a priority, the GDI is committed to bridging the gap between the North and the South, adhering to the new development concepts of innovation, coordination, green, openness and sharing. With core priorities centred around addressing climate change, fostering green development
China’s economy has undergone a rapid process of digitalisation in recent decades, particularly since the early 2010s. Simultaneously, the Chinese government is placing increasing emphasis on green development, committing to achieving CO2 emissions peak before 2030 and carbon neutrality before 2060. This ambitious agenda encompasses all sectors of the economy and presents considerable challenges, with the digital sector playing and continuing to play a pivotal role in the green transformation of China's economy.
Aligned with the country's new five-year plan, the 14th Five-Year Plan for the Development of the Digital Economy has been formulated, outlining specific goals and measures to be achieved by 2025. China envisions the digital economy as crucial for its overall development objectives, with plans to elevate its core industries from 7.8% of total gross domestic product (GDP) in 2020 to 10% by 2025. Within the framework of economic security and risk prevention, the policy document underscores the importance of sustainability, emphasising the guidance of private capital toward investment in original innovation fields and the support of business models favouring sustainable development.
Indeed, digital-ESG initiatives are emerging in China, reflecting proactive efforts aimed at expediting the implementation of the 2030 Agenda for Sustainable Development. The country has initiated the development of Innovation Demonstration Zones on the Implementation of the 2030 Agenda, leveraging scientific and technological innovation to play a supporting and leading role in sustainable development. This strategic move reflects China's commitment to integrating digitalisation and ESG principles to drive sustainable development goals
In Malaysia, the integration of digitalisation into various business sectors is reshaping operational landscapes and creating value, with profound implications for ESG practices. Indeed, a robust foundation for digital technology adoption has been laid through influential policies and initiatives, including the National Strategic ICT Roadmap, Industry4WRD, National Fiberisation and Connectivity Plan, and Malaysia Digital Economy Blueprint (MyDigital), reflecting a dedicated commitment to advancing digitalisation across sectors. Nonetheless, according to the Communications Ministry, despite Malaysia's digital economy constituting 22.6% of its GDP and serving as a pivotal economic pillar, the full integration of robust ESG principles into digitalisation remains suboptimal.
While still in its early stages, Malaysia's digitalisation strategies aimed at promoting ESG principles are taking shape within various policy documents, inching closer to fruition. The Malaysian Investment Development Authority has recently launched funding facilitation initiatives, including the Domestic Investment Accelerator Fund and the Madani Smart Automation Grant, which are aimed at bolstering high-value economic endeavours among local manufacturers and service providers. These funds play a pivotal role in encouraging local businesses to upgrade their capabilities while aligning with Malaysia's commitment to innovation, automation, digitalisation, and sustainable ESG practices, thus exemplifying a forward-looking approach.
Additionally, a collaborative effort between Bursa Malaysia and the London Stock Exchange Group has resulted in the launch of the Centralised Sustainability Intelligence Platform, which is designed to encourage businesses of all sizes to adopt sustainable practices. Furthermore, the 12th Malaysia Plan underscores the ambition to harness the potential of the digital economy for inclusive, responsible, and sustainable socioeconomic growth, and the New Industrial Master Plan 2030 emphasises technology and digital transformation as catalysts for achieving Net Zero goals.
Besides, the Malaysia Digital Economy Corporation (MDEC) is actively promoting the growth of Malaysia's digital sectors, emphasising financial inclusion and ESG adoption
The GDI is crucial in advancing Malaysia's digital-ESG development, representing a key area of cooperation between China and Malaysia. China, leveraging the GDI, seeks to seamlessly integrate digital technology into the real economy, catalysing the transformation of industries in alignment with ESG principles. The existing collaboration between China and Malaysia in this domain has already delivered fruitful outcomes, and there exists substantial untapped potential. For instance, according to the Investment, Trade and Industry Ministry, Malaysia is committed to pursuing the ESG agenda by collaborating with China on developing its green economy. To enhance and deepen this cooperation, both countries should expedite the implementation of high-level agreements, strategic plans, and relevant memoranda of understanding. This collaborative effort not only unlocks significant opportunities for Malaysia's growth in the digital economy but also positions the nation to thrive in the digital-ESG landscape.
Dr Sonia Kumari Selvarajan is Senior Lecturer at the Department of Political Science, Public Administration and Development Studies, Faculty of Business and Economics, Universiti Malaya. The views expressed here are entirely the writer’s own.
The SEARCH Scholar Series is a social responsibility programme jointly organised by the Southeast Asia Research Centre for Humanities (SEARCH), Tunku Abdul Rahman University of Management and Technology (TAR UMT), in conjunction with the 10-year anniversary of the Belt and Road Initiative.