SMEs Vital to Helping Malaysia Achieve Net Zero GHG Emissions

The Ministry of Environment and Water Malaysia (KASA) and Capital Markets Malaysia (CMM) have jointly launched an initiative to advance the adoption of environmental, social and governance (ESG) practices by SMEs in Malaysia, as announced during a webinar today (22 March).

The webinar is the first in a series of capacity-building initiatives to support SMEs in developing corporate sustainability programmes that will contribute towards the nation’s aspiration to achieve net zero greenhouse gas (GHG) emissions earliest by 2050. The fulfilment of this target is contingent upon the completion of the Long-Term Low Emissions Development Strategy (LT-LEDS), currently being developed by KASA and expected to be finalised by the end of 2022.

CMM and KASA are collaborating to support SMEs seeking to decarbonise and transition their operations to become more sustainable businesses. The programme will focus on strengthening the capabilities of SMEs in two key areas: planning and implementing a sustainability strategy and calculating an organisation’s greenhouse gas emissions in a six-step process.

Dato’ Seri Ir. Dr. Zaini Ujang, Secretary General of KASA, said: “As part of our strategy to address climate change, the Government encourages companies in Malaysia to declare the aspiration of net zero GHG emissions in ensuring the sustainability of the company’s operations. Given that small and medium-sized enterprises accounted for 38.9% of Malaysia’s overall GDP in 2020, SMEs will have an extremely vital role to play in the national climate change agenda.

“Quantifying your emissions will provide many other benefits for your business, which includes saving money, improving your energy efficiency and managing risks while building competitiveness and your reputation. Businesses have no option but to take stock of their emissions to be ahead of others and to be relevant in these challenging times.”

Chairman of CMM Datuk Zainal Izlan Zainal said, “Large corporations seeking to meet enhanced sustainability standards, particularly those which have set Net Zero carbon targets, must rely on their suppliers to follow suit.”

He added that the programme forms an important component of a key priority for CMM’s Centre for Sustainable Corporations to advance the sustainability efforts of Malaysian public listed companies. As CMM continues supporting these companies in their sustainability journey, it is important to ensure that the SMEs – which form part of their supply chains – also move in tandem.

According to the CDP’s Global Supply Chain Report 2021: Engaging the Chain: Driving Speed and Scale, which analysed data from over 11,000 suppliers globally, while there is a growing trend of buyers wanting to understand the impact of emissions from their supply chain (Scope 3 impact), suppliers are currently struggling to respond.

The report indicates that only 28 percent of suppliers reported having a low-carbon transition plan in place while 56 percent did not have any climate targets at all in 2021.  

For more information on corporate sustainability and sustainable finance in Malaysia, please visit CMM’s website: https://www.capitalmarketsmalaysia.com/.