00:00Malaysia is moving closer to a new era of climate regulation with the upcoming National Climate Change Bill,
00:06which will introduce a measurement, reporting and verification framework as the foundation for carbon pricing and future carbon tax.
00:14The policy is expected to begin with high-emission sectors such as energy, iron and steel, signalling a major shift
00:21towards a low-carbon economy.
00:22But while the law may target large emitters first, are Malaysian businesses truly prepared for the changes ahead?
00:29So with global buyers, investors and lenders increasingly demanding emissions data and climate disclosures,
00:35many companies are actually already facing climate-related requirements regardless of regulation.
00:40So the question is no longer about whether climate compliance is coming, but whether businesses can turn it into a
00:46competitive advantage.
00:48So to understand what this means for companies and how they can prepare, we speak with Joseph Akab, the Vice
00:53President of ESGP.
00:55Good morning, Joseph.
00:58Good morning. Thank you for having me here.
01:00Thank you for taking the time to speak with us today.
01:03Like I mentioned earlier, Malaysia now appears to be focusing on emissions measurement before introducing a carbon tax.
01:08So is this a deliberate attempt to avoid the implementation challenges that some other countries faced when pricing carbon too
01:15early?
01:15What are your thoughts?
01:18Well, carbon pricing only works if everyone has confidence in the underlying data.
01:25And this is needed so that you can now tax properly and eventually trade properly as well.
01:33And the importance of having this MRV framework is to be able to regularize and put a domestic framework into
01:43it.
01:45And we see now that many businesses still see carbon reporting as a compliance exercise.
01:50So how can companies turn emissions data into a strategic advantage rather than just another regulatory requirement?
02:00Well, a lot of leading companies already have been doing this, they are more prepared and they have more opportunities.
02:07So, for example, they have now access to better financing opportunities.
02:14They can make better decisions in terms of specialty now that we have oil price hike, right?
02:22And so one example of that is to be able to navigate the resiliency of the business, which the importance
02:31of emissions data is going to be crucial for any decisions that you make now that we have this oil
02:38price hike as an example.
02:40But more importantly, when this bill comes into play and other regulations that impacts carbon tax, pricing and trading.
02:53So basically businesses are pretty much ready and that raises an important question about who within an organization will ultimately
03:00be responsible.
03:01So do you think our European will ultimately have a bigger impact on boardroom decision-making and investment planning than
03:08on sustainability teams themselves, Joseph?
03:13Yes, absolutely.
03:16We are seeing more and more now climate data being part of the consideration in terms of investment opportunities and
03:25decisions the board makes.
03:28Sustainability teams definitely will have the ground level work in terms of visibility and the technicalities of their carbon footprint.
03:38But ultimately, the boardroom has to make decisions continuously in investments, financing and other major decisions.
03:48And therefore, that is going to be the future of decision-making in the boardroom.
03:55Now, it's already happening, right?
03:57Don't get me wrong.
03:58It will just be more crucial moving forward, especially when these bills and regulations come into play.
04:05We're seeing more and more now in our platform the use and demand for intensity, information and data because of
04:16this drive of ensuring climate resiliency being part of boardroom decisions.
04:23So, Joseph, realistically, beyond the boardroom, the impact of the law is likely to be felt across the wider businesses'
04:32ecosystem as well.
04:33So the sectors most often mentioned are energy and steel.
04:36But could the indirect impact on SMEs through supply chains end up being far more significant than the direct impact
04:43on large emitters, Joseph?
04:46Definitely.
04:48While we have the high emitting industries to be the first to be regulated, it will impact the supply chain
04:57more importantly.
04:59So, for example, in construction industry, you are dealing with many suppliers, if not hundreds of them, either in a
05:08single project or multiple projects.
05:10And therefore, this bill will impact also these SMEs, which are thousands in number in terms of looking at the
05:18supply chain to cover what is required by the upcoming law.
05:24And therefore, the industries like energy and steel will have to involve the suppliers to be able to make up
05:33and make the right reporting and disclosure at the same time impacts the tax and trading eventually later on.
05:44So, yes, definitely, the supply chain is impacted.
05:48Definitely, that's the bigger story here.
05:51But ultimately, it starts with the drive of the corporate and the industry sector that is going to be the
05:57first in line to follow this upcoming bill.
06:02Joseph, there's one concern.
06:03Can you walk us through how can businesses ensure they are not investing in the wrong systems or reporting frameworks
06:09today,
06:10especially when the final details of the law have yet to be announced?
06:15Well, ultimately, what we always say is to gather the baseline information that you have and that are the more
06:24important metrics or the baseline foundation, as we call it.
06:28What are those?
06:29Your fuel consumption, electricity consumption.
06:33You may have other utilities like water and waste disposal.
06:38Production activity as well.
06:40Those are all vital information that all corporates already have in control and have visibility.
06:48Structure that those information to be ready for disclosure or analysis internally and externally is going to be the game
06:58changer for them.
07:00Because that makes them prepared for either this bill or a client requirement or maybe an upcoming tender requirement or
07:11other cross-border regulations.
07:14You don't have to have a sophisticated system in place at the first onset,
07:19but at least you have the structured system and platform in place that can support you organize these vital key
07:27environmental categories
07:29so that you can now proceed to a bigger emission and sustainability reporting,
07:36which involves not just environment, but definitely social aspects, governance aspects, and economic aspects.
07:45All right.
07:46But as businesses with their options, it may also be useful to look at how neighboring countries have approached similar
07:52policies.
07:53So looking at Singapore, Japan, Indonesia, and Thailand,
07:56what lessons can Malaysia learn from their carbon pricing journeys that could actually help the country avoid costly policy mistakes?
08:04Regionally, we have seen different approaches.
08:08Singapore have the carbon pricing from the onset, and therefore stability is going to be there,
08:16which many businesses would really appreciate because the first thing you want to happen in changes and new regulations would
08:25be predictability.
08:27When we look at Indonesia, they opted to look at trading first.
08:33Look at Thailand, they looked at the climate change law as well, and it's being ongoing execution, right?
08:43So many different countries have different approaches, but ultimately, if you're starting with the approach Malaysia is doing,
08:53which is the measurement carbon registry before any carbon tax and pricing and trading happens,
09:01that makes all businesses have time for them to have better preparation.
09:07That's number one.
09:08And then second, have ultimately the accuracy in terms of pricing and the tax and trading eventually.
09:18And this will help all Malaysian businesses definitely because you have a standard domestic framework to follow before any exchanges
09:29and pricing comes into play.
09:31Amazing.
09:32So to sum this discussion up,
09:34our European could mark a significant step in Malaysia's climate journey,
09:37bringing new expectations for businesses to track and manage their emissions.
09:41And while compliance will be important, companies that prepare early may also uncover new opportunities for growth, investment and market
09:48access.
09:48So thank you, Joseph Acabo, the Vice President of ESGpedia, for sharing your insights on how businesses can get ready
09:54for the changes ahead
09:55and turn climate readiness into a competitive advantage.
09:59All right, don't go anywhere.
09:59We have one more discussion, two more discussions after this.
10:02So we'll be right back.
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