Driving sustainability and net zero goals in Malaysia

The newly launched iESG Framework aims to expedite sustainability goals within seven years, with Phase 1.0 spanning from 2024 to 2026.
By: | October 4, 2023
Topics: ESG | Malaysia | News

Malaysia is making strides towards sustainability and its target of achieving net-zero emissions by 2050 with the launch of the Industry Environmental, Social, and Governance (iESG) Framework. This initiative, introduced by the Investment, Trade, and Industry (MITI) Ministry, is poised to play a pivotal role in helping Malaysia reach its sustainability objectives within a seven-year timeline, potentially tapping into the US$12 trillion global ESG-focused market.

Tengku Datuk Seri Zafrul Abdul Aziz, Minister of MITI, unveiled the iESG Framework during the Phase 1.0 launch, which spans from 2024 to 2026. Phase 2.0 is slated for the period from 2027 to 2030.

“MITI believes that the transition towards sustainability and meeting Malaysia’s aspiration to become net zero by 2050 will bring numerous benefits in terms of sustainable growth and job creation,” he said.

As a Paris Agreement signatory, Malaysia has committed to reducing greenhouse gas emissions by 45% by 2030 and achieving carbon neutrality by 2050. The iESG Framework aligns with the nation’s Push for Net Zero mission within the New Industrial Master Plan 2030 (NIMP 2030).

The framework comprises four pillars—standards, financing, capacity building, and market mechanisms—along with 17 strategies, 50 deliverables, and six key enablers. It aims to guide manufacturing organisations, particularly micro, small, and medium enterprises (MSMEs) towards ESG compliance.

Phase 1.0 prioritises the principle of “Just Transition”. Recognising that local organisations, particularly MSMEs, cannot immediately adhere to standards already established by organisations in developed markets over a decade or more, this approach ensures inclusivity within Malaysia’s economic framework.

Zafrul highlighted the importance of supporting MSMEs in the manufacturing sector, as they comprise nearly 98% of Malaysia’s business establishments, employing 7.3 million people. These MSMEs contribute approximately 8% to the country’s gross domestic product and 9% to its exports, reported New Straits Times.

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As Malaysia pursues its sustainability goals through initiatives like the iESG Framework, the role of HR leaders becomes increasingly critical. To empower HR professionals, HRM Asia is set to launch the ESG Masterclass series, starting with the inaugural session titled Sustainability in Action for CHROs.

Joanne Flinn, Chair of the ESG Institute, will join the masterclass to delve into the realm of ESG, providing HR leaders with an in-depth understanding of current ESG standards, the pressures they entail, and future directions. The Malaysia edition of the ESG Masterclass will take place on 23 November 2023 at Hilton Petaling Jaya. To find out more, click here.