The first session of the International Construction Transformation Conference (ICTC) held at the Malaysian International Trade and Exhibition Centre (MITEC), Kuala Lumpur, on Nov 14 featured speakers under the banner: The Dawn of ESG in Construction.

The speakers included Bursa Malaysia’s senior vice-president of Bursa Intelligence, Index and Sustainable Business Wong Hui Yin, Malaysia Green Building Council CEO Mitch Gelber and Malaysian Association of Social Impact Assessment president Herlina Ab Aziz.

They shared updates and progress in terms of ESG adoption in Malaysia, specifically among companies in the real estate and construction industry, and offered their know-how on the topic through their individual companies and services.

More companies are becoming increasingly responsible in operating sustainably, with decarbonisation topping the agenda, followed by cultivating a productive workforce and upholding ethical business principles, said Bursa Malaysia senior vice-president of Bursa Intelligence, Index and Sustainable Business, Wong Hui Yin, during her session titled “Advancing Malaysian PLCs’ ESG Journey”.

She said, however, that there are still gaps and challenges in sustainability reporting such as data availability, reliability and comparability. “We are still not quite there yet and there are still challenges we must tackle. First is the lack of comparable and standardised data. Second is we must keep pace with the latest regulatory requirements. Third is to bring everybody within the organisation to the table to discuss and ensure that there’s a strategy in place and that the company is putting its best foot forward in terms of complying with the standards. Lastly, something that a lot of companies now face is the increased demand from capital providers like banks and insurers before they want to finance you. These are some of the reality checks that we must address.”

To contribute to Malaysia’s transition to a greener economy, Wong says Bursa has initiated a five-point plan. The first is the requirement for mandatory ESG disclosures by Malaysian public-listed companies (PLCs) starting in December this year and the provision of FTSE4Good ESG scores to all listed PLCs from 2023 to 2025.

Wong noted that the stock exchange had invested in the FTSE4Good ESG assessment to create a call to action and drive awareness for small to mid-sized PLCs in ESG adoption. The FTSE4Good ESG assessment will continue to be carried out independently by FTSE Russell at no cost to PLCs.

“Come June 2024, we expect all Main Market companies to have an ESG rating based on FTSE4Good, and for all ACE market companies in 2025, by which time we will have a good assessment of how the market is actually performing in terms of ESG,” she added.

Second, Bursa is developing the Centralised Sustainability Intelligence (CSI) Platform in collaboration with the London Stock Exchange Group. Slated to be launched in 1Q2024, the CSI platform aims to be the national infrastructure for ESG disclosure for PLCs and small and medium enterprises.

The third point is the early adopter programme (EAP) that Bursa launched in April. This connects carbon disclosure to the financing ecosystem and has onboarded banks to the programme to incentivise good behaviour.

Fourth, Bursa started engaging with regional peer exchanges in June to drive interconnectivity for new business opportunities for Malaysian companies, and has signed a memorandum of understanding with Indonesia Stock Exchange (IDX) and the Stock Exchange of Thailand (SET) to collaborate on ESG matters.

The fifth point is to continue having active engagements with leading government ministries and agencies influencing sustainable finance and trade.

“This is our vision. It stems from the fact that we are a platform operator that is focused on collecting information to address stakeholders’ needs. We want to reduce market fragmentation because there are so many platforms. So, we want to bring everything together. On top of that, we want to ensure that this is not just for disclosure reporting or addressing compliance needs. Rather, we must find value in the disclosure reporting, and we are trying to build that ecosystem into this platform,” said Wong.

In her session titled “Social Impact Assessment for Development Projects in Malaysia”, Malaysian Association of Social Impact Assessment (MSIA) president Herlina Ab Aziz said that while ESG focuses on evaluating overall corporate behaviour, social impact assessment (SIA) specifically targets the social implications of a particular project or development activity.

“The implementation of SIA reflects a commitment to responsible, sustainable and community-centred construction practices, ensuring that projects contribute positively to both the built environment and the communities they serve,” Herlina said.

She noted that there are several types of SIA in Malaysia, including a compulsory assessment for project developments that fall under the Town and Country Planning Act 1976. Such projects are of national and state interest and have to be approved by the National Physical Planning Council or have significant social impacts determined by the state’s local authority or Jabatan Perancangan Bandar dan Desa (PLANMalaysia).

SIA is an important tool for development projects, she said, specifically for planning and also as a decision-making tool for the government. “This is to ensure that the project adheres to national policies and laws, benefits society, and its adverse impacts are reduced to acceptable levels.

“It’s very important for the industry to understand the social implications of their project and help mitigate their social implications,” she added.

During a Q&A session, Herlina said understanding people’s lifestyles is important for responsible construction practices. “We need to understand people’s lifestyles, and lifestyles are changing rapidly. So, there is a need for the government to review its guidelines and for developers to assess their projects according to their surrounding communities.”

In his session titled “Construction Towards Net Zero”, Malaysia Green Building Council CEO Mitch Gelber said that from a national perspective, transitioning to clean energy is not only an environmental imperative but also an economic one.

“Buildings cost money to maintain and run; so, if you’re investing money in maintaining your building and not taking into account energy efficiency at every step of that value chain, you’re burning money just like you’re burning coal. But if every time you’re going to replace a system, you are investing that same amount of money in the most efficient solution possible, you’re spending zero extra capital expenditure and you’ll reap the benefits of additional energy efficiency.”

He added that the country has reached a point where it is cheaper to purchase and install solar PV (photovoltaic) on a building’s roof than it is to purchase electricity from the grid. “The price of solar PV has dropped by about 500% over the last 15 years and the return on investment (ROI) on solar PV is three to four years. In other words, if you invest three years of electricity bills upfront, you’ll get 17 years of electricity free of charge. These economics are changing the way we think about how we build and how we operate our buildings.”

Gelber further observed that projects were now installing solar PV not just for ESG compliance, but for profitability as well. “If an installation like this was done for marketing purposes, you would see a fraction of this amount of installation.”

Taking IOI City Mall Phase One, for example, Gelber noted that the 211,472 sq m retail mall had achieved an overall carbon reduction of 45% and energy savings of 38%. “The entire roof of the shopping mall is covered with 3.5MW of renewable energy.

“Every usable surface area of the roof is installed with PV because the shopping mall is making money generating income from that PV, and we’re going to see this increasingly in the construction sector. The rooftop is valuable real estate. We’re starting to see buildings that are developing canopies, developing extensions of the roof, not just for solar shading, but also because the roof area or square footage is marketable and saleable.

“This is the changing environment of ESG. We’re not doing this for compulsory reporting or that it looks good in our annual report, but because this is a viable pathway and framework to help our businesses stay competitive and to maximise profits.”

This session, titled “Exploring New Horizons/Iconic ESG Projects”, featured a closer look at public and private projects from Malaysia, Zambia and Dubai that all embraced ESG as a key component of their master planning. The speakers included Zambia’s Minister of Infrastructure, Housing and Urban Development Charles Lubasi Milupi,Penang South Islands Project master planning director Eddie Chan, MyHSR Corp Sdn Bhd CEO Datuk Mohd Nur Ismal Mohamed Kamal and TAK Group of Companies design director Hairul Nizar Tamaddun.

As infrastructure development remains a major challenge to growth, economic diversification and human development in Zambia, Milupi welcomes international investors to explore public-private partnership (PPP) investment opportunities in the landlocked African country.

In his presentation titled “Zambia’s Implementation of Sustainable Infrastructure Projects Using Public-Private Partnership Model: A Case for Infrastructure Development in a Situation of Constrained Fiscal Conditions”, Milupi said Zambia was aggressively implementing the Link Zambia 8,000 project, which aims to transform the country from landlocked to land-linked.

Through the project, which involves paving 8,201km of road at an estimated cost of US$5.6 billion (RM26 billion), Zambia is expanding its collection of tolls on major roads to fund road maintenance and broaden financing options for road infrastructure development, mainly via the PPP model. Despite a continued need for new infrastructure investment, the Zambian government’s financing ability is constrained over the short to medium term, owing to fiscal reforms and renegotiating existing debts with commercial creditors.

“The PPP model allowed us to speed up progress of our infrastructure developments, spur local economic growth and bring in foreign investment. It is a win-win model. We welcome both local and international investors to explore investment opportunities in Zambia, as the country is the gateway to Africa, thanks to its strategic location, and has so much to offer,” said Milupi.

Eddie Chan, master planning director of the Penang South Islands (PSI) Project, introduced the vision of turning PSI into a Silicon Island in his presentation titled “Penang South Islands Master Plan”.

PSI is a joint-venture master plan between the Penang state government and SRS Consortium Sdn Bhd. The development is designed to be low carbon with green features incorporated into the master plan and urban development guidelines, in line with Penang’s drive to become a green, sustainable and resilient state.

“The Silicon Island vision is aimed at creating and delivering a smart sustainable development that increases liveability to enhance quality of life socially, economically and environmentally. The Silicon Island master plan will be laid out to embody best urban design practices referencing environmental, social and governance (ESG) principles, 70:30 transportation modal split, United Nations Sustainable Development Goals, carbon neutrality and prioritising green initiatives that promote biodiversity, renewable energy, water recovery, promoting 5R recycling and new parking policy,” Chan said.

He added that the five key design principles of the 2,300-acre Silicon Island are ecology, mobility, community, resiliency and sustainability.

“A comprehensive public transport network comprising the LRT, e-Bus and water taxi is planned in conjunction with about 110km of bicycle tracks to take care of first-last mile connectivity. We are also going to establish car-free zones and have a new parking policy to reduce parking requirements. With this, we hope to achieve 20.26% carbon reduction in line with the LCC2030C [Low Carbon Cities 2030 Challenge],” Chan said.

He highlighted that the commitment and realisation of ESG in planning the island is essential in future-proofing the island, as well as in attracting global investors and businesses to maintain the land values and promote land sales.

The Silicon Island has an estimated total land value of RM14 billion, with 31.3% of land allocated for industrial use, 16.88% for residential, 6.07% for commercial, 7.14% for mixed, 17.5% for blue-green network (public green spaces, central canals, public beaches and mangrove wetlands) and 21.11% for infrastructure and public amenities.

Changing the way we travel intercity in Malaysia, which is still very much dependent on private vehicles, is the effective way to reduce CO₂ emissions, according to MyHSR Corp Sdn Bhd CEO Datuk Mohd Nur Ismal Mohamed Kamal.

In his presentation titled “Exploring New Horizons/Iconic ESG Projects: Kuala Lumpur-Singapore High-Speed Rail”, Nur Ismal highlighted that the transport sector was the second-biggest driver of carbon emissions in Malaysia after electricity production, while road transport had been identified as the largest carbon emitter among all transport subsectors.

“In reducing CO₂ emissions, we have to change the way we travel, especially our dependency on private vehicles, to more environmentally sustainable public transportation such as the High-Speed Rail, or HSR, for intercity journeys,” he remarked.

He said vehicles had outnumbered the Malaysian population, hence it is necessary to explore the transition from different modes of transport, such as the HSR, which can carry up to 20,000 passengers per hour in each direction without delay or congestion, to reduce traffic congestion and cut down carbon emissions significantly.

“Apart from reducing carbon emissions, the HSR offers more environmentally sustainable benefits, such as the use of electric equipment, as HSR operations typically involve EMUs (Electric Multiple Units) that produce lower carbon emissions. HSR projects also often employ innovative engineering and design practices to minimise environmental impact,” Nur Ismal noted.

Other than that, the HSR requires lower maintenance than roads and highways. It also requires less land, hence the reduction of deforestation, habitat destruction and carbon emissions from land clearing.

Nur Ismal also touched on the economic benefits of the HSR.

“The HSR project presents an exceptional investment opportunity, with the potential to unlock robust economic prospects along the corridor. This strategic venture will not only expedite planned developments but also generate substantial job opportunities, contributing significantly to Malaysia’s post-Covid recovery and reform.”

He said the private sector could play a pivotal role in shaping the nation’s future by being part of this transformative project.

In his session titled “Meydan City — When Luxury Meets ESG”, TAK Group of Companies design director Hairul Nizar Tamaddun introduced Meydan City as a case study on how a world-class development can embrace ESG principles and thrive.

Starting out as just a racecourse grandstand project, Meydan City — located in the Ras Al Khor area of Dubai — has expanded into a sustainable forward-thinking city development that will feature hotels, a racecourse grandstand, residential towers, commercial components, offices, parks and open spaces, and malls.

TAK is part of the master planning team for the 40 million sq ft project currently under construction.

“The core designs of Meydan City are sport, tourism and lifestyle while also embracing the key ESG principles that are poised to bring greater impact to the social, local policy and governance aspects, economy and sustainability and environment,” Hairul said.

Rather than just building a racecourse grandstand that opens for certain seasons during the year, he said, the idea to build a city within a city with a complete ecosystem to complement the grandstand can maximise its impact for economic, social, governance and policy as well as environmental sustainability.

The master developer has been consistently enhancing the ESG and green elements of the project. In July, the developer and SirajPower, the leading solar energy provider in the region, formed a strategic partnership to install a state-of-the-art 1.2MWp solar rooftop system at The Meydan Hotel in Nad Al Sheba, Dubai.

This innovative solar solution is expected to generate 2.1GWh of clean energy annually, significantly reducing the hotel’s reliance on non-renewable energy sources.

By embracing a sustainable alternative such as solar power, The Meydan Hotel is contributing to Dubai’s Clean Energy Strategy and the populous city’s goal of achieving a 75% clean and renewable energy mix by 2050.

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