KUALA LUMPUR (June 3): Malaysia’s businesses must be mindful of green goals as 70% of local exports are channelled to countries committed to net-zero carbon emissions by 2040 to 2050, with Malaysia itself aiming for 2050, said AmBank Research.
AmBank chief economist Dr Anthony Dass said that currently sectors that are “very high” on the environmental, social, and governance (ESG) risk level are the oil and gas, metals and mining as well as coal power generation, which altogether contribute 10% of the country’s gross domestic product (GDP).
He said next on the "high" ESG risk level are the chemicals, refining and marketing, and agribusiness sectors, which contribute 17% to Malaysia’s GDP.
Meanwhile, he listed the sectors on “medium” risk: automobiles, technology hardware, environmental services, forestry, transportation, building materials, aerospace and defence, containers and packaging, home builders and developers and midstream.
“We can see that 70% of our exports go to countries that are committed to net-zero [carbon] emissions by 2040 and some by 2050. Malaysia is into 2050. Can you imagine any Malaysian businesses who do not commit to this, why should clients from outside buy from us?” Dass said at a virtual briefing on market outlook on Friday (June 3).
“If the company is in the export market and not moving in this net-zero direction, then your product has difficulties, potentially, to generate bigger market share. And the supply chain that could be [made of] local domestic players will also be affected. In the longer term, it would be a strong negative for Malaysia.”
He said the Malaysian government is also moving towards sustainability and ESG development.
“Green financing is the way forward. We work closely with Bank Negara Malaysia (BNM) and with Bursa Malaysia, the government is moving towards sustainability, ESG. To achieve that, we are coming up with policies.
“BNM is pushing hard on green financing. And our engagement with Bursa is for Bursa to have a roadmap for listed companies to see how they are moving into ESG, capital raising through green financing,” Dass said.
He recommended that businesses in the automotive industry should position in electric vehicles (EVs), as Malaysia aims to have EV charging stations in the entire west coast of Peninsular Malaysia and some in the east coast by 2030.
He also pointed out that globally by 2040, 90% of vehicles are “supposed” to be EV-related.