KUALA LUMPUR – The proposed Voluntary Carbon Market (VCM) has attracted public listed companies (PLCs) such as Petroliam Nasional Bhd (Petronas) and Tenaga Nasional Bhd to produce credits for the effort.
Chief executive officer of Bursa Malaysia Bhd, Datuk Muhamad Umar Swift, stated that the company is seeking parties to manufacture carbon credits aside from developing the carbon exchange.
He remarked that VCM will assist Malaysian businesses in maintaining a competitive edge in the country’s export markets.
Additionally, it will establish a framework for Malaysian businesses to offset their carbon footprints in export markets, he said during a seminar on Corporate Sustainability and Environmental, Social, and Governance (ESG) Investing organised by the Universiti Utara Malaysia’s School of Economics, Finance, and Banking (SEFB).
The European Union (EU), Malaysia’s third-largest trading partner, is considering imposing a tariff on imported carbon-intensive items.
As a result, Malaysian exporters may be required to pay a tax in order to sell their products in the EU market, which is where the VCM can help offset the impact, Muhamad Umar explained.
Exporters can easily ship their products to the EU by establishing carbon neutrality for their products, he noted.
“We sought to determine the best course of action in light of the threat and opportunity, Muhamad Umar explained.
ESG disclosure a must for PLCs
On environmental, social, and governance issues, he explained that Bursa Malaysia has produced a public consultation document seeking feedback on the required disclosure of several ESG metrics.
“This will make it easier for investors to understand how businesses are meeting their ESG obligations, he explained.
Muhamad Umar said that the COVID-19 outbreak has prompted many businesses to prioritise ESG.
At the moment, the FTSE4Good Bursa Malaysia Shariah (F4GBMS) Index consists of 79 PLCs. The index was introduced in July 2021 in response to investor demand for ESG and shariah-compliant index solutions.
He added that ESG compliance is critical for PLCs, primarily to get financing, since more investors and fund managers incorporate sustainable aspects.
Employees Provident Fund has implemented a Sustainable Investment Policy with the goal of achieving ESG compliance by 2030 and a climate-neutral portfolio by 2050.
Permodalan Nasional Bhd will also announce its ESG commitment some time soon.
Bursa Malaysia has also launched a PLC Transformation Programme, which will run through 2025, with the objective of guiding all PLCs toward accelerating their growth goals and improving performance.
The course will assist PLCs in increasing their profitability in light of the shifting investment climate associated with ESG.
Muhamad Umar stated that two-thirds of Bursa Malaysia’s listed companies suffered losses during COVID-19. Indeed, he stated, a downward trend in profitability was observed over a period of time among publicly listed companies.
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