Renard Siew

As our world grapples with the challenges posed by the climate crisis, governments, organisations, and industries are called upon to have higher levels of transparency on climate disclosures. Frameworks such as the Task Force for Climate Related Financial Disclosures (TCFD) has emerged to guide companies on this journey. To spur adoption of better climate disclosures, the local regulatory stock exchange Bursa Malaysia has through its Enhanced Sustainability Reporting Framework mandated publicly listed companies to align their reporting to TCFD by 2024. Yet, in Malaysia, climate disclosures made by publicly listed companies seem to fall short of expectations and bring into question whether many will be able to meet the requirement set by the regulatory stock exchange. Recent findings revealed that less than 30% of the Top 100 listed companies have adopted fully the requirements of the TCFD based on a readiness index measured across its four elements covering strategy, governance, risk management as well as metrics and targets. Zooming more specifically into the property and construction sector which is responsible for 40% of global emissions revealed that only less than 20% of Malaysian companies within this sector has met the minimum requirements that has been set forth. This does not come as a shock as a closer examination reveals several troubling factors including the lack of transparency on climate disclosures, inadequate harmonization of reporting standards (although this is starting to change through the introduction of the International Sustainability Standards Board or ISSB), and a concerning lack of commitment towards addressing the pressing issue of climate change. While some progress has been made in recent years, the overall transparency regarding climate disclosures among Malaysian publicly listed companies remains dismal where companies provide only high-level information, often confined to general statements about "environmental awareness" and "sustainability efforts." Genuine transparency requires a more detailed account of a company's carbon footprint, emissions reduction targets, and the strategies in place to achieve them. The absence of specific figures and detailed plans raises questions about the actual impact these companies are making towards reducing their carbon footprint. Inadequacy of current climate reporting standards is another key challenge not just in terms of the measurement method that is proposed (degree of uncertainty in capturing accurate carbon performance i.e. how do you compare companies if the baseline measured changes over time or between absolute versus intensity figures) but also the increasing number of reporting frameworks and requirements specifically on climate disclosures that have grown and emerged over time. Malaysian companies typically lack a standardized approach in climate reporting, largely contributed by the growth in these emerging carbon tools. As an example, TCFD aside, there are also other reporting frameworks set by agencies or bodies such as the Carbon Disclosure Project (CDP) as demanded by clients, sectoral specific disclosures – Partnership for Carbon Accounting Financials (PCAF) for companies in the financial sector; Green Building Index (GBI) for the property and building sector, specific climate disclosure requirements by other financiers and regulators for example the Climate Change Principles Taxonomy (CCPT) governed by the Joint Committee of Climate Change overseen by the Central Bank of Malaysia. Flaws have been pointed out across some of these tools. Critiques have argued that for some of these tools there is insufficient reasoning behind some of the criteria and weightings attached, does not sufficiently account for uncertainty analysis which may affect the level of accuracy of such reporting and how most of these tools focus on lagging indicators as opposed to forward looking indicators. These bring to light the trustworthiness of such tools where trillions of dollars are invested based on the outcomes of these tools. The Socially Responsible Investment (SRI) market is estimated to be more than $17 trillion in assets under management. A further analysis of climate disclosures reveals a conspicuous lack of ambitious emission reduction goals among Malaysian companies. While leading global corporations are setting net-zero emission targets and aligning their strategies with the Paris Agreement's goals, Malaysian companies often fall short in this aspect. The absence of clear, measurable targets and timelines raises doubts about their commitment to achieving substantial and much needed environmental change. The lack of regulatory enforcement and consequences further exacerbates the climate disclosure problem. In the absence of robust enforcement mechanisms, companies may lack the incentive to provide accurate and comprehensive disclosures. This lack of accountability not only hinders the progress towards addressing climate change but also erodes investor confidence and prevents the allocation of resources towards genuinely sustainable endeavors. The critical examination of climate disclosures by Malaysian companies paints a less than desired picture. Despite the global urgency surrounding climate change, the absence of standardized reporting frameworks, coupled with the lack of accountability and ambitious emission reduction targets, perpetuates a culture of inadequate disclosures and may be seen by other parties as greenwashing. For Malaysian companies to make significant strides in combating climate change, it is imperative for regulators, investors, and stakeholders to demand greater transparency, accountability, and concrete action from these companies. Without a collective effort to hold these corporations accountable, the path to a sustainable future remains uncertain.

As the world grapples with the escalating climate crisis, the upcoming COP28 (28th Conference of the Parties) which is only one month away presents a unique opportunity for ASEAN nations to showcase their collective commitment to addressing the challenges presented by climate change. This diverse group of nations faces unique climate challenges, including rising sea levels, extreme weather events, and threats to food and water security. As a result, ASEAN has become acutely aware of the dire consequences of climate change and the need for collective action. In recent years, ASEAN countries have taken several significant steps to address climate change. They have ratified the Paris Agreement, which seeks to limit global temperature rise to well below 2 degrees Celsius. Furthermore, they have developed the ASEAN Joint Statement on Climate Change, signaling their shared commitment to mitigating climate change and adapting to its impacts. This unity within ASEAN is a testament to its determination to tackle climate issues effectively. In preparation for COP28 where the first global stock take mandated by the Paris Agreement will check on the progress of countries in reference to their commitments, the ASEAN region has emerged as a pivotal player in the global fight against climate change. ASEAN, the fourth largest energy consumer rely heavily on fossil fuels which make up 83% of its energy mix. However, as the consequences of climate change become increasingly severe, these nations recognize the need to transition to cleaner and more sustainable energy sources which has led to increased adoption of renewable energy, such as solar and wind although at a much slower rate. The current status of ASEAN countries in terms of reduction targets and RE targets are presented in Table 1.Table 1. Summary of ASEAN countries reduction targets and renewable energy targetsCountries Reduction targets Renewable Energy Target Malaysia Reduce carbon emissions intensity of GDP by 45% by 2030 compared to 2005 levels Generate 20% of its electricity from renewable sources by 2030. Singapore Peak its emissions around 2030 and to halve its emissions from its 2030 peak by 2050 Announced plans to quadruple its solar energy deployment by 2025 and aims to have solar energy contribute to at least 2 gigawatt-peak (GWp) by 2030. Thailand Reduce greenhouse gas emissions by 20% below the BAU scenario by 2030. Increase the share of renewable energy in its energy mix to 30% by 2036 Vietnam Reduce greenhouse gas emissions by 8% below the BAU scenario by 2030. Achieve 10% of total electricity generation from renewables by 2030 and 20% by 2030 under a more ambitious scenario. Philippines Reduce emissions by 75% by 2030 compared to a business-as-usual scenario. Renewable energy target to achieve 35% of its total installed capacity from renewable energy sources by 2030 Indonesia Reduce emissions by 29% by 2030, with the potential to increase the reduction to 41% with international support. Achieve 23% of its energy mix from renewable energy sources by 2025, with a long-term goal of reaching 31% by 2050 Brunei Reduce emissions by 20% relative to BAU by 2030 Renewables to make up 30% of power generation by 2035 Cambodia Reduce emissions by 41.7% by 2030 compared to BAU 25% of renewable energy by 2030 Laos Reduce emissions by 60% by 2030 30% of renewable energy share out of total consumption by 2025 Myanmar Cumulative reduction target of 121 MtCO2e (unconditional) and 158MtCO2e (conditional) over the period 2021-2030 1.2% share of solar and wind in the total energy mix by 2030 Climate adaptation is a vital aspect of ASEAN's climate strategy. Many of the region's low-lying coastal areas are particularly vulnerable to sea-level rise and extreme weather events. The region is particularly susceptible to climate-related disasters, from typhoons in the Philippines to droughts in Vietnam. Building climate resilience involves a combination of adaptation measures and disaster risk reduction strategies. One way that ASEAN can showcase its commitment to climate resilience at COP28 is by promoting ecosystem-based approaches to disaster risk reduction. These approaches leverage ASEAN’s unique natural environment's capacity to absorb and mitigate climate-related risks. For example, mangrove restoration and sustainable forest management can help protect coastal communities from storm surges and flooding. ASEAN can use COP28 to advocate for such solutions and gain international support for their implementation. It is only by enhancing existing infrastructure (which is a huge gap in most ASEAN countries), implementing effective flood mitigation strategies, and improving disaster preparedness that ASEAN countries can better adapt to the changing climate and protect their citizens and economies. COP28 provides ASEAN countries with an international platform to strengthen their climate diplomacy. ASEAN has historically played a pivotal role in facilitating regional cooperation, and this diplomatic experience can be leveraged to build global consensus on climate issues. By collaborating with other nations at the conference, ASEAN can help bridge the gap between developed and developing countries, advocating for climate financing (where progress has been dismal) and technology transfer to aid the most vulnerable nations. One of the key challenges facing COP28 is the ongoing North-South divide regarding climate responsibilities. Developed countries are called upon to provide financial and technological support to developing nations as part of their climate commitments as part of Loss and Damage which will remain key focus areas for COP28. ASEAN, as a group of both developing and developed nations, need to have a stronger voice and bridge this divide by promoting equity and fairness in climate negotiations. By emphasizing the importance of a just transition, ASEAN can help ensure that all nations, regardless of their economic status, have the support they need to address climate change effectively. To make significant progress in the fight against climate change, ASEAN countries must harness innovation and promote technology transfer. As the world moves towards renewable energy, energy-efficient technologies, and sustainable agriculture, ASEAN countries can benefit from adopting these innovations. COP28 can serve as a platform to facilitate the exchange of ideas and technologies that can accelerate the region's transition to a low-carbon economy. By sharing best practices and collaborating on research and development initiatives, ASEAN nations can develop sustainable solutions tailored to their unique challenges. This not only reduces the region's carbon footprint but also fosters economic growth by creating new green jobs and industries. ASEAN's embrace of technology and innovation at COP28 can be a game-changer in the global quest to combat climate change. The ASEAN region's role in COP28 is pivotal, and its success can set the stage for a more sustainable and climate-resilient world. The collective commitment of ASEAN nations to address climate change, set regional climate goals, collaborate diplomatically, innovate and promote technology transfer, and enhance climate resilience can inspire global action. As the world gathers at COP28 to confront the climate crisis, the ASEAN region's contributions will undoubtedly play a crucial role in shaping a more sustainable future for all.

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Renard Siew

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