ESG PRACTICE IN MALAYSIA

(CASE STUDY: PKNS)

Guest Lecture with En Mahfizul Rusydin bin Abdul Rashid,

General Manager of Strategic Planning (PKNS)

9 December 2022 (Friday)

Park & Amenity Management,
Faculty of Architecture, Planning and Surveying
Universiti Teknologi MARA (UiTM)
 Table Of Content
What Really Caused Climate Change
How Climate Change Happen
Various Climate Risks To Business Operations
Impact of Climate Change to Malaysia Financial Institutions
International Initiatives to Address Issue of Climate Change
What Is SDGs & ESG
ESG Implementation & SDGs Integrations
Application Of The Triple Bottom Line Approach For Actionable ESG
Benefits of ESG Integrations
3 Pillars of Sustainability
Understanding the Concept and Relevance of ESG
ESG from the perspective of the Malaysian Code on Corporate Governance 2021
Initiatives from the Government: Advancing Sustainability
Dasar ESG PKNS
Key Takeaways
Climate Change Is The Biggest Threat Modern Humans Have Ever Faced
What Really Caused Climate Change?

• Changes in earth’s orbit

around the sun (1%)
• Natural causes: solar
output, volcanic eruptions,
plate tectonics, decreased
carbon sink (1%)
• Anthropogenic causes
(human activities);
increased GHG emissions
and land use changes
(98%)
 How Climate Change Happen?

Before the As of 15
Year of 1750 October 2022
20 %
80 %

Intensity of
Intensity of GHG 20 % GHG
(180 - 280ppm) 80 % (415.85ppm)

15 October 2022 This table presents the most up-to-date, daily average reading for
415.85 ppm
atmospheric CO2 on the planet. Units = parts per million (ppm)
15 October 2021 413.79 ppm Measurement location = Mauna Loa Observatory, Hawaii, United States
(1 Year Change) 2.06 ppm (0.50%)
Source: www.co2.earth
 Various Climate Risks To Business Operations

Regulatory Sustainability Stakeholder

Physical Risk Input Risk Market Risk Other Risks
Risk Risk Risk

The risk of ESG

The impact of Example:
changing Example:
Climate The Example:
regulations on Reduced Example:
change could consequences The risk of
the business demand for
The impact of reduce the The low of failing to state fragility
that result products and
abnormal availability of energy deliver on the and social
from a rising categories that
weather on raw materials infrastructure expectations unrest if
price on high are not
assets and vital to such as hydro of key extreme
carbon responsive to
operations production of facilities that stakeholders weather
sources and mitigation and
goods and are being put and also called undermines
energy- adaptation
services at risk from Reputational basic needs
intensive priorities
activities reduced river Risk
flow
Impact of Climate Change to Malaysia Financial
Institutions
 International
Initiatives to
Address Issue of
Climate
Change
 ESG is an approach to evaluating the
extent to which corporate works on
environment, social and governance
that go beyond the rate of maximizing
shareholders’ return in attaining the
triple bottom line of profit, people
and planet of corporate sustainability.

What Is SDGs & ESG?

The Sustainable Development Goals (SDGs)

or Global Goals are a collection of 17
interlinked global goals designed to be a
"shared blueprint for peace and prosperity for
people and the planet, now and into the future"
ESG Implementation &
SDGs Integrations
 NATIONAL LOW CARBON CITIES
MASTERPLAN REQUIRE ALL CITIES TO
MEASURE GHG EMISSIONS, MITIGATE &
REPORT TO STATE UPEN / MINISTRY
ENERGY IS THE BIGGEST CONTRIBUTOR
TO GHG EMISSIONS AT ALL LEVELS

NATIONAL ENERGY POLICY (2022 –

2040) PROVIDES OPPORTUNITY TO
REDUCE COSTS & CARBON FOOTPRINT
REAL ESTATES WILL PLAY A MAJOR ROLE FOR CITIES, STATES
& NATION TO REDUCE CARBON FOOTPRINT
ESG is a process,
not an outcome
 Organizations that practice the triple bottom line
may reap benefits such as:

• Reduced energy consumption and carbon

footprint by focusing on the environment.

• Higher employee retention rates by making the

work environment more pleasant for workers.

• Enhanced brand perception and reputation by

showing others the organization stands for more
than just making profits.

• Improved productivity and reduced costs

through sustainability efforts.

• Increased transparency and accountability of

operations, potentially attracting new investors.

Application Of The Triple Bottom Line Approach For Actionable ESG

Benefits of ESG Key differentiator to provide a competitive advantage &

Integrations leading to improved long- term financial performance.

> 80% of corporations in the S&P 500 now publicly

report performance against ESG standards
Disclosure of current performance and improve
future performance will help create the most
value for the company & its shareholders in
the long run

More real estate owners & operators are integrating

environmental performance as
part of their business strategies

Environmental performance can help real estate companies

attract lucrative tenants who are seeking efficient, healthy and
green certified buildings.

Incorporating ESG factors can lead to increased

profitability through higher property values and retention
and improved return on investment
 3 Pillars of Sustainability

The
Environmental
The Social Pillar The Economic
Pillar
business Pillar
minimizing and
practices that the financial
eliminating
promote the viability,
greenhouse gas
health, safety governance and
emissions and
and well-being transparency of
protecting the
of people a business
planet and its
resources
 Understanding the Concept and Relevance of ESG

The three pillars of

sustainability of any
company:
ESG stands for Environmental, A corporate governance and
Social and Governance investment framework -Environmental
-Social
-Governance

Adoption of ESG principles consider,

The most notable trends in
measure, report and work to improve
corporate governance,
the environmental, social, and
management, and investment
governance aspects of their business
of the past two decades
alongside its financial considerations

Environmental
criteria
• The energy a company takes in
and the waste it discharges,
the resources it needs
• The consequences for living
beings as a result. Not least, E
encompasses carbon
emissions and climate change
• Every company affects, and is
affected by, the environment
Understanding the
Concept and Relevance
of ESG
Social criteria
• Addresses the relationships a
company has and the
reputation it fosters with
people and institutions in the
communities where it does
business
• S includes labour relations,
diversity and inclusion
• Every company operates
within a broader, diverse
society
Governance
criteria
• The internal system of
practices, controls, and
procedures a company adopts
in order to govern itself, make
effective decisions, comply
with the law, and meet the
needs of external stakeholders
• Every company requires
governance as it functions as a
legal creation
 Physical risks that
companies need to
face upon in dealing
with critical issues of
climate change
 The board together with
Urgency in need for boards and management are responsible for
senior management of public- the sustainability governance in
listed companies to manage ESG the company including setting the
risks and opportunities company’s sustainability
strategies, priorities and targets
ESG from the perspective
of the Malaysian Code
on Corporate
Clarifying the relationship
Governance 2021 between ESG and corporate
Underlying ESG issues are
becoming mainstream/central to
governance where integration of
the ability of companies to create
sustainability consideration is
durable and sustainable value and
now required in corporate
maintain the confidence of their
strategy, governance and
stakeholders
decision-making as sustainability
 Initiatives from the Government: Advancing Sustainability
Initiatives on Climate Change
Climate Change initiatives:
Strides to mitigate climate change and
elevate ESG issues in the journey towards
becoming a low carbon economy country
Sets out Malaysia's medium-term
socioeconomic development plan for a period
of five years, with 'Advancing sustainability' as
one of the themes
Committed to its target of becoming a carbon
neutral nation by 2050 at the earliest
Carbon-related:
under Budget 2022:
Voluntary Carbon Market
Committed to be a carbon neutral country by
Initiative for carbon credit trading between 2050 at the earliest
green asset owners and other entities
transitioning towards low-carbon practices
Conservation of natural areas to maintain at
Low Carbon Transition Facility least 50% forest cover over the total land area
Bank Negara Malaysia (BNM) funded RM 1
billion to help SMEs adopt sustainable and
low carbon practices Creating carbon taxation system to
incentivise behavioural changes and platform
for carbon trading
Sustainability ‘sukuk’ (bond) Programme
Funds to finance SME projects that directly
Promote Renewable Energy Certificate to
support 11 of the 17 United Nations
enable procurement and trading of RE
Sustainable Development Goals (SDGs)
 Initiatives from the Government: Advancing Sustainability
Rancangan Malaysia ke-12
Energy related
Formulate National Energy Policy 2021-2040
Increase RE installed capacity to 31% by 2025
Adopt new technologies
Encourage waste-to-energy generation
Promote existing mechanisms
Introduce the Energy Efficiency (EE) & Conservation
Act to regulate use of energy
Promote EE, Energy Audit Conditional Grants (EACG)
for selected industrial & commercial sectors
Compliance of the National Building Energy Intensity
(BEI) labelling in selected private properties
No longer build new coal-fired power plants
Transport related
Promote usage of green vehicles
Encourage uptake of recognised green labelling for next generation
vehicles and technologies
Expand B20 biodiesel programme (contains 20% palm methyl ester)
and B30 programme
Intensified triple-helix collaboration, including Green Technology
Financing Scheme (GTFS), Green Investment Tax Allowance (GITA)
and Green Income Tax Exemption (GITE)
Low-carbon mobility blueprint
Low-carbon public transport
Micro-mobility services to increase access to public transport
User-friendly active mobility, pedestrian and cycling infrastructure

Membina Perniagaan
Berdaya Tahan
Strategi Utama:
Membina perniagaan yang
mampu bertindak balas terhadap
gangguan dengan mudah
sambil terus mengekalkan
operasi perniagaan
dan melindungi aset
Dasar ESG PKNS
Melindungi
Alam Sekitar
Meningkatkan
Kesejahteraan Sosial Strategi Utama:
Strategi Utama: Melibatkan pihak
berkepentingan dan
Mencapai keseimbangan antara mengambil kira
perkembangan perniagaan kesejahteraan mereka
dan perlindungan alam sekitar sepanjang menjalankan
perniagaan
 Dasar I:
Membina Perniagaan Berdaya Tahan

Strategi Utama Pelan Tindakan Sasaran 2023-2028

• Dasar dan objektif/sasaran

• Bandar Berkembang Maju Dan
Berdaya Tahan
Membina perniagaan yang mampu
bertindak balas terhadap gangguan
• Perolehan & Pengurusan
dengan mudah sambil terus
Pembekal Yang
mengekalkan operasi perniagaan
Bertanggungjawab
dan melindungi aset
• Dasar Rantaian Bekalan Mampan
• Membina Usahawan
jangka masa pendek, sederhana
dan panjang sustainabiliti bagi
pembangunan produk
• Garis panduan dan TOR kriteria
sustainabiliti (bahan binaan
mampan, air, tenaga, GHG, sisa,
kepelbagaian biologi,
kesejahteraan pekerja, DEI)
• ‘Sustainability Centre of
Excellence’ di kalangan GLIC
Selangor
 Dasar II:
Melindungi Alam Sekitar
Strategi Utama Pelan Tindakan
• Kesemua produk hartanah
• Sisa & Pelepasan Ke Alam
Mencapai keseimbangan antara
Sekitar • Produk hartanah bernilai tinggi
perkembangan perniagaan dan
• Penggunaan Sumber
perlindungan alam sekitar
• Kepelbagaian Biologi
Sasaran 2023-2028
PKNS dimasukkan kriteria
rekabentuk dan pembinaan
mampan yang bersesuaian
(merangkumi prinsip ‘circular
economy’)
perolehi pengiktirafan
sastainabiliti seperti GBI, LEED
atau yang setaraf
• Dasar Kepelbagaian
Biologi/Biodiversiti
• Pelan biodiversiti setiap
pembangunan

Meningkatkan Kesejahteraan Sosial
Strategi Utama
Melibatkan pihak berkepentingan
dan mengambil kira kesejahteraan
mereka sepanjang menjalankan
perniagaan
Dasar III:
Pelan Tindakan Sasaran 2023-2028
• Dasar dan program berkaitan
kepelbagaian, kesaksamaan &
• Kepelbagaian, Kesaksamaan &
keterangkuman
Keterangkuman
• Program latihan berkaitan
• Latihan Dan Pendidikan
kelestarian
• Penglibatan Masyarakat
• Aktiviti pelibatan masyarakat
untuk setiap projek baru PKNS
 Key Takeaways

Malaysia is still in
the early stages
ESG factors have ESG regulatory
of its ESG journey ESG is about the become a global
- imperative,
aspects are
future viability
placing companies developing,
companies, of your business
Understanding under increasing standards are
regulators, - your
your scrutiny. This converging,
investors (and organization
stakeholders is heightened more will
other must be stakeholder focus
non-negotiable emerge in line
stakeholders) sustainable to means boards are with ESG
have just started have a viable confronted with appreciation and
developing their business model new expectations growth
ESG programs
 THANK YOU
OPEN FOR QUESTION & ANSWER (Q&A) SESSION