00:00The ongoing Iran war and disruption of the Strait of Hormuz have created the biggest global energy shock since 1970s,
00:07slashing about 20% of world oil and LNG supply and driving brand crude above 100 to 110 US dollars
00:14per barrel.
00:16And formerly is here balancing its role as a net energy exporter with domestic affordability and long-term sustainability.
00:22This Iran shock sharply highlights the energy trilemah and the net
00:26the need to accelerate the shift away from fossil fuel dependence.
00:30So to discuss further on this, we have Joseph Aqabo, the Vice President of ESGpedia.
00:35Thank you for joining us this morning, Joseph.
00:37We would like to ask to start with how does the Iran oil shock fundamentally reshape
00:43Malaysia's energy trilemah from an ESG perspective, please.
00:48Yes, morning and thank you for having me.
00:51So this current situation that we're in makes Malaysia really more into a unique position
01:01because Malaysia is a producer and a consumer.
01:05So meaning this shock will have double impact to the country.
01:11Now, having said that, this will also shift the country from long-term viability of energy
01:20into looking at immediate operational issue.
01:24When I say operational issue, it's that the energy transition.
01:31In your opinion, Joseph, does this crisis accelerate genuine structural energy transition in Malaysia
01:36or is it still largely short-term fuel switching?
01:40Or do you have any other opinions?
01:45Yes, that's a good question.
01:46So initially, this will create a short-term impact, particularly in reacting or the country's reaction
01:57in basically looking at the trilemma, right?
02:01The security, affordability, and the sustainability in long-term.
02:06But this will also have an impact on the long-term because this will allow the country to look at
02:16and revisit the national energy transition roadmap to put more pressure and resiliency into the roadmap
02:29to avoid any other shock going through if this will happen again in the future.
02:38But moving forward, if all prices remain elevated, what second-order ESG and business risks
02:45should Malaysian companies prepare for?
02:49Well, cost is immediate, right?
02:52But the real challenge here is the competitiveness, right?
02:57Competitiveness in terms of how the production and consumption will be the centerfold of the plans
03:08and the structure and infrastructure of energy, right?
03:12So imagine you will force into looking at the margin pressure is there, real.
03:21And from that, you will also look at, you have to also look at supply chain disruption.
03:27You can also look at potentially delayed investments, right?
03:33So with this, you will look at, stakeholders would look at how exposed companies are in Malaysia.
03:43And that's the reason why this instance now, or this scenario that we're in, ESG is really important.
03:54It becomes now just not a reporting element, but it is a resiliency measurement.
04:02So how can actually bursalistic companies turn energy volatility into ESG leadership and also access to sustainable finance?
04:14Well, there are three points that I can think about that.
04:18First is the visibility of information for the corporates as well as the leaders, right?
04:28When you have complete information in real time, you can now then look towards efficiency, transition, and provide impactful actions.
04:41And when you do that, you can easily communicate to specifically investors if you're a corporate, what's your transition plan,
04:51what's your strategy, and how would you react in these types of situations, right?
04:58So, and if I look at the perspective of environmental and social governance, this will also provide a way for
05:07the leaders to put their companies and organizations in a better position to access sustainable finance.
05:16So, in reality, companies have been resilient, right, especially in Malaysia as well, being the, again, being the producer and
05:29consumer in terms of energy.
05:30But when you say that the impact of what's happening right now is it tends to shift the focus a
05:43bit into how we'll be resilient more, how we can become more resilient.
05:51And that's one of the most important factors leaders must look into.
05:56But, Joseph, how does the current crisis can actually expose the gaps between ESG reporting and true transition readiness?
06:08Right. So, that's a good question.
06:11So, for the longest time, ESG is looked at as a reporting activity, right?
06:17But the most important part and what this situation and scenario is telling us is that if you have the
06:26availability of information of your ESG, you can become now a better responder and you can become resilient.
06:38So, this tells us that many companies can report, definitely, but very few can respond in real time.
06:49So, if you can use this information and use this activity as your way to respond in real time to
06:58be more resilient, corporates and companies would have a better position.
07:03And it also has a best use of environmental and social data.
07:11And beyond policy and price signals like data governance and execution capability, which will determine which organizations truly navigate these
07:21energy shocks successfully.
07:22So, what insights from ESG PDS Asia data set that shows how energy instability drives ESG performance?
07:32When we say data maturity and when we have information and complete information and we or the organization has a
07:47way and a system to access that information in real time, right?
07:52That company puts itself in a position to be resilient, all right?
07:56And again, information can come from many different phases, from many different formats.
08:04The most important part is to make this information accessible and also understandable from all the key personnel up until
08:17the top, the board, the leadership, right?
08:21And when they have this information and when they can access that information in real time, then they can make
08:29not just better decision, but faster decision, right?
08:34So, if you look at environmental and social governance, your ESG information and ESG component, right?
08:41You can use that as your operational intelligence to really drive what short-term actions or long-term impact the
08:51organization can take, especially with the current situation.
08:56So, ultimately, this crisis may prove to be a defining stress test, separating companies that merely disclose ESG from those
09:05that have generally embedded resilience, transition energy and strategy, and long-term value creation into their business models.
09:12So, that wraps up our discussion with Joseph Akabud, the Vice President of ESG PDS.
09:17Thank you so much, Joseph, for your time and insights that you shared earlier, and you can find this whole
09:22discussion on all of our social media platforms, and that includes Astro Awani.
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