KUALA LUMPUR (June 10): Khazanah Nasional Bhd, in line with its sustainability framework launched on Friday (June 10), has set a target of achieving carbon-neutral operations by the end of 2023, according to its managing director Datuk Amirul Feisal Wan Zahir.
During the launch of Khazanah's sustainability framework on Friday, Amirul Feisal said that another environmental sustainability target of the sovereign wealth fund is to also aim for net-zero emissions by 2050.
"In line with the national level commitment and the 1.5-degree pathway [under the Paris Agreement], we will aim to achieve net-zero emissions by 2050.
"In the nearer term, we will also be working towards carbon-neutral operations by 2023, actively assessing ways in which our organisation can eliminate our emissions footprint through better work practices — as well as funding initiatives and projects providing a carbon offset," he said.
Amirul Feisal said Khazanah's sustainability framework is designed to be holistic and is derived from an understanding of its priority material issues under the pillars of environmental, social and governance (ESG).
"Sustainability should not be taken as a box-ticking exercise. The material ESG issues pose an existential threat to existing GLC (government-linked company) business models, and we must take a holistic problem-solving approach in developing our own future based on issues that are most material to us," he added.
He said that Khazanah must safeguard Malaysia's natural assets for current and future generations, aim to improve socio-economic well-being of all stakeholders as well as ensure its actions and policies are carried out in a responsible manner.
Towards executing a coherent response to sustainability, Amirul Feisal said Khazanah will focus its efforts on sustainable investing (SI) — how it makes investment — and enterprise sustainability (ES) — how it operates as an organisation.
"For SI, our efforts would depend on the size of investment we make. For investments where we have a significant stake, we have a role to be more active in stewardship and advocacy as a shareholder. For smaller stake investments, we will ensure investee companies are committed to ESG transition plans.
"For ES, we will embed sustainability into our day-to-day work — such as our own energy usage and consumption patterns, as well as travel practice. Beyond the footprint of our roughly 500 staff, we also aspire to create impact through contributions to society and community," he said.
Addressing Khazanah's other sustainability targets, Amirul Feisal said in regard to the social aspects, Khazanah aims to have women comprise 30% of the boards and senior leadership positions at the sovereign wealth fund and its key portfolio companies.
He noted that this is aligned with Prime Minister Datuk Seri Ismail Sabri Yaakob's call at the GLC Open Day on March 11, 2022 for GLCs to achieve a level of female representation of at least 30% board members.
"We will start by enhancing the diversity, equality and inclusion policies and programmes within our organisation to ensure that we are making structural changes towards a better workplace.
"On top of that, we will also identify and measure socio-economic impact for all relevant initiatives, including those under [its foundations] Dana Impak and Yayasan Hasanah," Amirul Feisal added.
In terms of governance, he said that Khazanah is to disclose its voting principles to promote transparency of its positions and enhance board competencies to ensure that leadership teams of its portfolio companies are equipped to manage pertinent issues — which include subjects around sustainability.
"Finally, we will require ESG-linked key performance indicators (KPIs) to be included for key leadership positions within our portfolio companies by 2023," Amirul Feisal added.
Meanwhile, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz — who officiated at the launch — highlighted that as announced in the Budget 2023 Pre-Budget statement, the government's position for 2023 remains firm in terms of enabling the implementation of ESG-focused development projects and programmes.
In accordance with this, Zafrul said the Ministry of Finance is encouraged to see Khazanah as well as other GLCs — such as the Employees Provident Fund, Tenaga Nasional Bhd, CIMB Group Holdings Bhd, and Petroliam Nasional Bhd — embrace the sustainability agenda via the incorporation of ESG into their respective core strategies.
"These GLCs contribute to the mainstreaming of ESG by serving as role models, catalysing change within their respective ecosystems, and encouraging the rest of corporate Malaysia to consider how they behave and how their actions affect the communities and environment in which they operate.
"To other corporates out there, and as the chief executive officer of a regional banking group before, I can assure you that these efforts will not only allow your companies to be more responsible, but will also protect your company's interest in creating value by mitigating potential environmental and regulatory risks," he added.