Investing in a Sustainable Manner

In recent decades, there has been a significant transformation in the worldwide investment landscape, placing a strong emphasis on factors related to sustainability, including environmental, social, and governance (ESG) considerations. The international community is becoming increasingly aware of the pressing need to combat climate change, tackle social issues, and support robust corporate governance.

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Investors now demand that companies, as well as nations, exhibit a robust ESG foundation to be deemed an appealing investment prospect. Malaysia, acknowledging the importance of sustainability, has synchronized its sustainability agenda with the objectives outlined in the United Nations Sustainable Development Goals (SDG).

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Malaysia is making progress in taking care of the environment, helping society, and improving how things are run. While the efforts have been good, there's room for more consistent work. Malaysia has been working steadily on sustainability, and you can see this in the better score it got in the SDG Sustainable Development Report. The score went up from 64.02 in 2000 to 70.38 in 2022, making Malaysia the second-best among ASEAN nations. It's a big deal that Malaysia achieved one of its 17 goals, which was getting rid of poverty.

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But even with these good things, there are still issues like cutting down too many trees, gaps between rich and poor people, and not using renewable energy fast enough. So, what more can Malaysia do to make things better? The government needs to take strong action, like handling the rising costs of living and dealing with big problems like food security and climate change. To really make progress, we need good plans, investments in sustainable technology, and everyone working together.

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The 12th Malaysia Plan (2021-2025) is a good step because it talks about things like growing in an eco-friendly way, using more renewable energy, protecting nature, and making sure everyone is included. The plan relies on the New Investment Policy to make Malaysia's economy better. This policy is based on important goals like growing important industries, making sure everyone benefits from growth, and improving how things are run and taken care of (ESG practices).

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Amongst the ASEAN-6 countries, Malaysian has committed to achieving the largest emission reduction target of 45% by 2030, underpinned by initiatives in the 12th Malaysia Plan to foster a green economy by promoting low carbon industries, decarbonization, circular economy and clean energy transition.

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Malaysia has plans like the Green Technology Master Plan, Renewable Energy Roadmap, and National Energy Efficiency Action Plan as well as the National Energy Transition Roadmap. These plans set the stage for Malaysia's progress in being more sustainable. It's also exciting to see the Malaysia Madani concept, where they want to build cities that are eco-friendly and smart, starting to happen in Greater KL.

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There has also been growing interest from foreign and domestic investors in Malaysia’s green economy. This is driven by the critical need to mitigate environmental and social impact and improve access to green financing. A supportive regulatory environment and increased collaboration between government and corporate sectors further spur this interest.

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Even though there are good plans and rules, what will really make a big difference is if everyone – the government, businesses, and regular people – all work together to make Malaysia more sustainable. Everyone has a role to play in making sure Malaysia's future is better for everyone.

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How will Malaysia meet its climate targets?

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National ESG Framework 2023

·???????? The framework will aim to assist small and medium sized enterprises (SMEs) in relation to funding and capacity building, and to support the transition to renewable energy.

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Climate Pledges

·???????? Nationally Determined Contribution (NDC), focusing on protecting biodiversity and mainstreaming climate resilience into urban planning.

·???????? Renewable energy target, aiming to reach 70% of renewables in the power mix by 2050, while announcing the end of cross-border trade barriers for renewable energy.

·???????? 2050 net zero commitment. RMK 12, spanning 2021-2025, articulates our commitment to achieve net-zero GHG emissions by 2050.

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Governance

·???????? Malaysia has taken steps to develop corporate governance practices within its economy. The Securities Commission Malaysia updated the Malaysian Code on Corporate Governance in 2021, emphasizing the role of the board and senior management in addressing sustainability risks and opportunities.

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Many big multinational companies (MNCs) that have picked Greater KL as their hub, aren't just doing regular business; they're setting the example for sustainability and taking care of the environment. Among the benefits that MNCs can leverage on are:

·???????? Enhanced brand equity and goodwill from closer alignment to ESG practice.

·???????? Increased demand from Institutional investors for ESG complaint practices

·???????? Sustainable business practices, leading to higher quality earnings.

·???????? Ability to address ESG considerations through innovative technologies.

·???????? Ability to minimize exposure to ESG-related business and operational risks.

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These MNCs bring a wealth of knowledge and technological innovations, shaping the landscape of sustainable business practices in Greater KL. They have infused their operations with sustainability principles of environmental conservation, resource efficiency, and social responsibility.

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It is uplifting to witness the growing commitment to sustainability within Greater KL, with multinational corporations (MNCs) leading the charge. Local businesses connected to the MNCs in the supply chain are taking notice and gradually adopting a sustainability mindset. This trend presents a unique opportunity for Malaysia, particularly in Greater KL, to leverage the sustainable practices established by these MNCs.

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The collaboration and learning opportunities between Malaysian entities and the MNCs in Greater KL are significant. It is imperative for businesses, policymakers, and individuals in Malaysia to actively engage with and draw inspiration from the exemplary sustainability practices in the region. The emphasis is not merely on imitation but on adapting and innovating to suit local contexts and needs. The repository of knowledge from these MNCs can propel Malaysia's sustainability journey forward, positively impacting the environment, society, and economy.

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Key components for advancing Malaysia's sustainability include comprehensive policies, sustainable technology investments, and collaborative efforts involving various stakeholders. Embracing this collective knowledge is a wise move, and the progress observed, especially in the thriving hub of Greater Kuala Lumpur, holds promise. While challenging, achieving sustainability is within reach and remains an attainable goal.

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Malaysia’s conducive ecosystem has created a landscape with high potential investment opportunities across several major themes:

·???????? Energy Transition - Decarbonising energy generation

o?? Malaysia is targeting 40% RE contribution by 2035.

·???????? Circular Economy - Waste management and recovery

o?? Waste reduction initiatives and achieve a targeted 40% recycling rate by 2025.

·???????? Environmental Engineering - Flood mitigation and water supply

o?? Tender 6 flood mitigation projects

o?? investing in sustainable and technology-enabled solutions

·???????? Food Security - Ensuring agricultural self-sufficiency.

o?? Modernization of the agricultural sector (Monitoring technology, Smart Farming & Biofertilizers and animal feeds

·???????? Mobility transformation - Driving the future of mobility.

o?? Growth of the electric vehicle (EV) sector to 38% of total industry volumes by 2040.

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As we witness the positive impact of sustainability practices within Greater KL, we extend a warm invitation to like-minded multinational corporations to join our thriving community. Malaysia presents an unparalleled opportunity for sustainable investment, and we believe that your commitment to environmental stewardship, social responsibility, and sound governance aligns perfectly with the values we hold dear. We welcome you to be part of our journey toward a more sustainable future, contributing not only to the success of your business but also to the well-being of our environment, society, and economy. Together, let's forge a path towards lasting and impactful sustainability in the heart of Malaysia.

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We assure you that InvestKL remains committed to working hand in hand with you, our investors to accelerate the transformation of Kuala Lumpur as an advanced city with inclusive and sustainable growth and development.

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Please feel free to reach out should you have any enquiries, InvestKL is Open for Business, and we are glad to assist.

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