Introduction:
The National Industry Environment, Social, and Governance (ESG) Framework is a comprehensive framework aimed at preparing Malaysia's manufacturing sector to embrace ESG principles and tap into the US$12-trillion global market focused on ESG opportunities (CEO Morning Brief, 2023). This article explores the key pillars of the framework, its implications for Government-Linked Companies (GLCs) and Public Listed Companies (PLCs), and the initiatives implemented by the Malaysian government to promote ESG practices.
The National Industry ESG Framework:
The National Industry ESG Framework comprises four pillars: standards, financing, capacity building, and market mechanism. These pillars are complemented by 17 strategies, 50 deliverables, and six key enablers. The framework provides invaluable guidance and drives a 'Just Transition' towards ESG-compliance in the manufacturing sector, with a particular focus on Micro, Small, and Medium Enterprises (MSMEs). It is a key enabler for the Push for Net Zero mission, one of the four missions of the New Industrial Master Plan 2030 (NIMP 2030).
Pillar 1: Standards Pillar: Establishing ESG Guidelines and Best Practices
The standards pillar of the framework aims to establish a set of guidelines and best practices for ESG compliance in the manufacturing sector. These standards will serve as a foundation for companies to ensure their operations align with ESG principles (CEO Morning Brief, 2023).
Pillar 2: Financing Pillar: Providing Financial Support for ESG Transition
The financing pillar aims to provide financial support to companies that are transitioning towards ESG compliance. This support will facilitate the adoption of sustainable practices and help companies overcome financial barriers associated with the transition (CEO Morning Brief, 2023).
Pillar 3: Capacity Building Pillar: Enhancing ESG Skills and Knowledge
The capacity building pillar focuses on providing training and development programs to companies, enabling them to adopt ESG practices effectively. By enhancing skills and knowledge, this pillar aims to empower companies to implement sustainable practices across their operations (CEO Morning Brief, 2023).
Pillar 4: Market Mechanism Pillar: Creating a Market for ESG-Compliant Products and Services
The market mechanism pillar aims to create a market for ESG-compliant products and services. By promoting the demand for sustainable offerings, this pillar incentivizes companies to adopt ESG practices and align their products and services with market preferences (CEO Morning Brief, 2023).
Implications for GLCs and PLCs:
The i-ESG Framework is expected to have significant implications for Government-Linked Companies (GLCs) and Public Listed Companies (PLCs). GLCs, being government-owned, are expected to lead by example in adopting ESG practices. The framework will help GLCs identify areas for improvement and enhance their ESG practices (CEO Morning Brief, 2023). On the other hand, PLCs will be required to disclose their ESG practices in their annual reports, enabling investors to make informed decisions based on their ESG performance (CEO Morning Brief, 2023).
Government Initiatives
The Malaysian government has launched several initiatives to support ESG practices in the country. One of these initiatives is Bursa Malaysia's Centralised Sustainability Intelligence (CSI) platform. Developed in collaboration with the London Stock Exchange Group, this platform serves as a repository for sustainability disclosures by listed companies and their supply chains. It reinforces ESG practices and facilitates the swift adoption of supply chain carbon emissions (Bursa Malaysia Berhad, 2021).
The New Industrial Master Plan 2030 (NIMP 2030) is an industrial policy formulated by the Malaysian government to transform the manufacturing and manufacturing-related services sector. NIMP 2030 aims to achieve economic complexity, high-value job opportunities, domestic linkages, cluster development, inclusivity, and enhanced ESG practices (Ministry of International Trade and Industry, 2021). It takes a mission-based approach, fostering collaboration between the government and the private sector to provide strategic direction (New Industrial Master Plan, 2023).
Conclusion
The National Industry Environment, Social, and Governance (ESG) Framework is instrumental in guiding Malaysian companies towards adopting ESG practices and capitalizing on the vast opportunities presented by the US$12-trillion global market focused on ESG. Its pillars, strategies, and enablers provide invaluable guidance for the manufacturing sector, with a particular focus on Micro, Small and Medium Enterprises (MSMEs). Additionally, initiatives like Bursa Malaysia's Centralised Sustainability Intelligence (CSI) platform reinforce ESG practices and disclosure among listed companies and their supply chains (Bursa Malaysia Berhad, 2021). With the support of Minister of Investment, Trade & Industry Datuk Seri Tengku Zafrul Abdul Aziz, who recognizes the i-ESG framework as a key enabler for the Push for Net Zero mission, Malaysia is poised to unlock global market opportunities worth US$12 trillion (Malay Mail Online, 2023). Minister Tengku Zafrul emphasizes the potential of the framework to drive sustainable growth and enhance Malaysia's position in the global market (Malay Mail Online, 2023).
The implementation of the National Industry ESG Framework and the New Industrial Master Plan 2030 (NIMP 2030) reflects Malaysia's commitment to empowering and encouraging environmental, social, and governance (ESG) and sustainability goals within the small and medium enterprise (SME) sector (Ministry of International Trade and Industry, 2021). By capitalizing on emerging global trends and fostering collaboration between the government and the private sector, NIMP 2030 aims to transform the manufacturing sector and create a more inclusive and sustainable economy (New Industrial Master Plan, 2023).
In conclusion, the National Industry Environment, Social, and Governance (ESG) Framework, along with initiatives such as Bursa Malaysia's Centralised Sustainability Intelligence (CSI) platform, play a crucial role in guiding Malaysian companies towards adopting ESG practices and capitalizing on the vast opportunities presented by the US$12-trillion global market focused on ESG. With the support of Minister Tengku Zafrul and the implementation of the New Industrial Master Plan 2030 (NIMP 2030), Malaysia is poised to achieve sustainable growth and enhance its position in the global market.
References
CEO Morning Brief. (2023). Industry Environmental, Social, and Governance (iESG) Framework Aims To Speed Up Transition Towards Sustainable Practices. Retrieved from https://www.ceomorningbrief.com/industry-environmental-social-and-governance-iesg-framework-aims-to-speed-up-transition-towards-sustainable-practices/
Chartered Secretaries Malaysia (MAICSA). (2023). National Industry Environment, Social and Governance (ESG) Framework. Retrieved from https://www.maicsa.org.my/resources/technical-research/technical-announcements/2023/231004-miti-national-industry-environmental-social-and-governance-esg-framework
Bursa Malaysia Berhad. (2021). Bursa Malaysia Launches Centralised Sustainability Intelligence (CSI) Platform. Retrieved from https://www.bursamalaysia.com/about_bursa/media_centre/bursa-malaysia-launches-centralised-sustainability-intelligence-csi-platform
Ministry of International Trade and Industry. (2021). New Industrial Master Plan 2030 (NIMP 2030). Retrieved from https://www.miti.gov.my/miti/resources/NIMP2030.pdf
New Industrial Master Plan. (2023). Overview of NIMP 2030. Retrieved from http://www.nimp.gov.my/index.php/en/nimp-overview
Malay Mail Online. (2023, October 2). Tengku Zafrul: iESG framework can lead to global US$12t market opportunities for Malaysia. Retrieved from https://www.malaymail.com/news/money/2023/10/02/tengku-zafrul-iesg-framework-can-lead-to-global-us12t-market-opportunities-for-malaysia/94018
Chartered Secretaries Malaysia (MAICSA). (2023). National Industry Environment, Social and Governance (ESG) Framework. Retrieved from https://www.maicsa.org.my/resources/technical-research/technical-announcements/2023/231004-miti-national-industry-environmental-social-and-governance-esg-framework
Author's Profile
Ifrah Bukhari is a certified Business Analyst with expertise in IT consulting and business analysis. She specializes in sustainable business practices, holding certifications in ESG risks and opportunities, climate change, and risk identification and materiality. Currently a Business Analyst at Softech360, Ifrah drives ESG reporting and consulting services. With a deep understanding of the challenges organizations face in adopting sustainability, she helps clients identify improvement opportunities and implement effective strategies to achieve their ESG goals. As a published author, Ifrah's ability to bridge IT and sustainability enables her to provide comprehensive solutions that drive long-term value for organizations, contributing to a more sustainable future.
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