Categories: SpeechesPublished On: 02/09/2021

Bismillahirrahmanirrahim, YBhg Dr. Veerinderjeet Singh, President, Malaysian Institute of Accountants (MIA), MIA CEO Dr. Nurmazilah Dato’ Mahzan, MIA Council Members, Fellow Accountants, Distinguished Panelists and participants, Ladies and Gentlemen. Assalamu’alaikum warahmatullahi wabarakatuh and a very good morning to all.

  1. Let me begin by thanking the Malaysian Institute of Accountants (MIA) for giving me the honour to deliver the keynote at today’s CLIMATE CHANGE & ESG CONFERENCE: ACCOUNTANTS – CHAMPIONS OF THE CLIMATE CHANGE & SUSTAINABILITY. I commend MIA for its ongoing proactive efforts in driving sustainable development within the accounting space. At a time when issues of climate change and sustainability are major concerns, I can attest to the importance of today’s theme that highlights the critical roles accountants play in ensuring businesses remain effective and create value for stakeholders in the best possible way.
  2. In anticipation of the discussions on ESG and sustainability later, please allow me to share my perspectives on the following four areas:
    1. Accelerate the phase-out of coal and encourage investment in renewable energy;
    2. Optimise energy demand and accelerate the transition to electric vehicles; and
    3. Reduce further deforestation and protect our carbon sinks


Ladies and Gentlemen,

  1. Over the past few years, increasing public awareness and the weight of scientific evidence on changing weather patterns have contributed to the mainstreaming of this topic. More recently, the COVID-19 pandemic has added to the urgency of this debate by demonstrating how a global crisis can jeopardise our way of life.
  2. Climate change, much like COVID-19, knows no borders and poses an existential threat to all of us. While COVID-19 and climate change may appear to be unrelated, they share many characteristics. For instance, both crises are causing significant disruptions to the global economy, undermining society’s resilience, and well-being, particularly in terms of loss of lives and livelihood. With more than 218 million cases and 4.5 million deaths worldwide to date, it is causing untold suffering globally. Malaysia alone had recorded 1.76 million cases and 16,972 deaths as of yesterday 1 September 2021.
  3. The global economy contracted 3.2% in 2020 with the UK suffering from the steepest contraction of 9.8%. Malaysia obviously was not spared with its GDP contracting by 5.6% in 2020. Unemployment rate rose to 4.8% (768,700 unemployed persons) as at June 2021. Median monthly household income declined by 11.3% from RM5,873 in 2019 to RM5,209 in 2020. Poverty incidence rate increased from 5.6% in 2019 to 8.4% in 2020 meaning some 639,800 households are now living below the poverty line income of RM2,208 per month. Climate change, if not addressed properly, will have a similar disastrous impact as the aftermath of COVID-19.

Ladies and Gentlemen,

  1. For nearly three decades, the United Nations has brought countries together for global climate change summits known as “Conference of the Parties” (COP). Since then, climate change has progressed from being a marginal issue to becoming a global priority.
  2. The United Kingdom, in collaboration with Italy, will be hosting COP26 in Glasgow in November this year. The conference aims to bring together more than 190 world leaders, as well as thousands of negotiators, government representatives, businesses, and citizens, to accelerate progress toward the Paris Agreement and the United Nations Framework Convention on Climate Change goals. This includes, among other things, achieving Global Net-Zero Emissions by 2050, halving net emissions by 2030, and keeping global warming to 1.5 degrees Celsius.
  3. According to the most recent count, some 127 countries responsible for 63 percent of global greenhouse gas (GHG) emissions are considering – or have adopted net-zero targets by 2050 or 2060. This includes the UK, that has enacted the most ambitious climate change target, reducing emissions by 78 percent by 2035 compared to 1990 levels, building on the earlier target of 68 percent reduction by 2030.
  4. Closer to home, Malaysia is expected to ramp up its climate ambitions beyond its current pledge to reduce its greenhouse gas emission intensity by 45 percent by 2030, including setting a clear net-zero target. According to 2016 data, the energy and transport sectors account for 75 percent of Malaysia’s greenhouse gas emissions, contributing 251mt CO2e out of the total 334mt CO2e. This large proportion attributable to the energy and transport sectors is common in most developed and developing countries.
  5. To achieve the global target of net-zero emissions by 2050, countries must commit to, among others:
    • Accelerate the phase-out of coal and encourage investment in renewable energy;
    • Optimise energy demand and accelerate the transition to electric vehicles; and
    • Reduce further deforestation and protect our carbon sinks
  6. If we do not act quickly, temperatures will continue to rise, causing catastrophic flooding, more frequent forest or bush fires, extreme weather, and the widespread extinction of flora and fauna. Something we are beginning to experience more frequently globally and at home.


Ladies and Gentlemen,

  1. Awareness and efforts to address climate change are gaining momentum in the country, with a host of ongoing initiatives led by the Ministry of Environment & Water, Ministry of Energy and Natural Resources, Bank Negara Malaysia, the Securities Commission and others. These efforts are being made to develop a climate change legal framework that will support the implementation of the Malaysian climate change commitments under the UN Framework Convention on Climate Change.
  2. Recently, we have seen the development of the Climate Change and Principle-based Taxonomy by Bank Negara Malaysia, as well as the Securities Commission’s SRI Roadmap, which aims to create a facilitative SRI ecosystem in the Malaysian capital market by integrating SRI and Islamic capital market.
  3. Over the years, Investors and fund managers have become more aware of the value proposition of incorporating ESG considerations in asset allocation and recognised the potential in the growing client demand for value-based investing. According to a recent Deutsche Bank/Global Sustainable Investment Alliance analysis, ESG-mandated assets are expected to reach USD160 trillion by 2036. This would imply nearly 100 percent ESG integration into fund management. Most of these fund managers, institutional managers and asset owners are signatories to the UN Principles for Responsible Investment that have committed to invest in companies that embrace ESG or sustainability in their business activities.
  4. Given all such developments, climate change is similarly becoming a key agenda or focus area for our corporates. In fact, we are heartened that some of our biggest corporates, such as Petronas, Maybank, and Tenaga Nasional Berhad, have stated their net-zero ambitions to address the impacts of climate change. Similarly, the transition towards a low carbon economy is being supported by financial institutions many of which are signatories of the UN Principles for Responsible Banking. Banks such as HSBC, for example, have pledged to be net-zero by 2050. This includes a commitment to stop funding coal projects. Many other banks, including Maybank and CIMB, have made similar commitments.
  5. We hope these companies can serve as good role models for their peers to follow. Companies that demonstrate both a commitment to lowering their GHG emissions and targets for getting there will most likely be favoured by investors both local and foreign.

Ladies and Gentlemen,

  1. Bursa Malaysia’s FTSE4Good Bursa Malaysia Index recognises PLCs that have taken steps to improve their ESG practices and disclosures. Since its launch in 2014, the number of constituents has tripled from 24 in 2014 to 76 stocks following the last review in June 2021.
  2. More recently, on 5 July 2021, Bursa Malaysia launched the FTSE4Good Bursa Malaysia Shariah Index comprising 54 constituents of the FTSE4Good Bursa Malaysia Index that are Shariah compliant according to the Securities Commission’s Shariah Advisory Council’s screening methodology.
  3. Apart from introducing ESG-related indices, Bursa Malaysia has also played a pioneering role in compelling PLCs to adopt good ESG practices and disclosures. For instance, since the establishment of the Sustainability Reporting Framework back in 2015, all Malaysian PLCs are now disclosing Sustainability Statements and Reports annually. Their reports outline the governance structure put in place, as well as the approach to managing their material sustainability matters, which covers relevant economic, environmental, and social themes.
  4. The updated Malaysian Code on Corporate Governance (MCCG) issued by the SC in April 2021 introduced best practices and guidance to strengthen board oversight and the integration of sustainability considerations in the strategies and operations of companies. Apart from the necessity to comply with MCCG 2021, the case for corporates to embrace sustainability is clear. Companies that choose to ignore sustainability/ESG consideration in their business will not be sustainable as they will be deprived of both equity and debt financing to fund their projects, unable to get insurance cover or need to pay higher premium to underwrite some of their risks, and difficulty to hire the human capital talent necessary to drive their business. Nor will they be able to sell their products or be part of the global supply chain as customers become more discerning in buying only sustainable products in the future.


Ladies and Gentlemen,

  1. As I previously mentioned, the issue of sustainability and climate change is now becoming mainstream on both national and global scales. It is certainly gaining traction in our field. Recently, the International Financial Reporting Standards Foundation resolved to enter the international sustainability standard-setting space. The involvement of the International Financial Reporting Standards Foundation will definitely galvanise and accelerate the convergence of the plethora of existing international ESG Frameworks – and we eagerly await to see how the accountants will really contribute to the conversation.
  2. In this regard, we do not just see the International Financial Reporting Standards Foundation role as crucial within the sustainability landscape – but the wider accounting community as well. Accountants have the knowledge, understanding, and a profound appreciation of the connection between financial performance, risk management, and ESG/sustainability considerations. Those in leadership positions such as CFOs can provide the critical link between management and stakeholders.
  3. Accountants can bridge the gap and establish connection between all parts of the business, as well as interpret the numbers meaningfully. More specifically, their rigor in assessing financial information could be extended into the non-financial aspects of the business. Furthermore, as the availability, quality, and comparability of ESG data becomes more key, accountants can and must take on the role of providing “assurance” in ensuring the credibility and reliability of sustainability data generated.
  4. Given the inter-relationship of economic, environmental, and social factors is increasingly material to long-term enterprise value creation, investors and stakeholders now expect companies to report on non-financial issues, risks and opportunities with the same discipline and rigor as financial information.
  5. Ultimately, we should aim for the quality of non-financial reporting to be on the same standard as financial reporting. This is necessary to facilitate comparability of ESG performance across companies and enable investors to apprise ESG risks, value creation potential and future performance.
  6. And if you ask me which profession is best prepared and suited to take on this task? My answer is the accountancy profession, without a doubt.


Ladies and Gentlemen,

  1. To tackle the issue of climate change holistically and comprehensively, beyond addressing the energy use and generation in our country, transition towards net-zero requires technology innovations, shifting consumer behaviours and socio-economic transformations.
  2. In this regard, as I mentioned at the JC3 Flagship Conference on 25 June 2021, I would like to draw your attention to an ongoing joint study by the World Wide Fund for Nature (WWF) Malaysia and the Boston Consulting Group to explore key building blocks and potential transition pathways for Malaysia to achieve a net-zero target.
  3. Based on preliminary findings, under the current “business as usual” pathway, carbon emission levels are expected to double from 75mt CO2e in 2016 to 159mt CO2e by 2050. A low carbon emission pathway will potentially reduce carbon emissions by 60 percent in 2050, but achieving net-zero by 2050 will require significant additional efforts.
  4. For illustration, the most cost-effective path to reach net zero by 2050 will require 59 percent renewables in energy mix, 60 percent in urban public transport modal share, 100percent EV penetration, retention of 55 percent forest cover or equivalent to 18.1 million hectares in 2050 compared to 18.2 million hectares currently, and deployment of carbon capture utilisation and storage technologies.
  5. Achieving all these will necessitate a total of RM350-400 billion cumulative investments (mostly in the energy sector) representing 0.8 percent of GDP per annum until 2050, which is relatively lower than 1.8 percent of GDP for Indonesia, 2.1 percent for China and 7.4 percent for India.
  6. In terms of benefits, Malaysia’s climate transition could generate up to RM40 billion in incremental GDP and 0.4 million incremental jobs by 2050. These net job creations will accrue across Malaysia based on each location’s/ region’s natural advantage. For example, Kedah and Penang with high solar irradiation are poised to host solar PV manufacturing and generation cluster, Selangor and Perak for EV manufacturing and supply chain, Johor and Pahang for Sustainable palm oil and bio energy cluster, Sabah for Green LNG production and export hub and Sarawak for Green hydrogen export economy.
  7. Another opportunity relates to maximising and enhancing Malaysia’s natural assets i.e. safeguarding current forest cover as a comparative advantage, expand reforestation, safeguard biodiversity and preserve forest quality, and unlock the full potential of nature based solutions. Let me qualify that the figures quoted earlier are preliminary numbers and are subject to further studies expected to be completed end September 2021.


Ladies and Gentlemen,

  1. The case of sustainability is a global priority. Given that businesses are inextricably linked to the wellbeing of all stakeholders, it is critical that all expectations and initiatives are aligned to propel the ecosystem forward.
  2. Accountants have a better understanding, knowledge, and appreciation of the relationship between financial performance, risk management, and ESG and sustainability considerations. They can bridge the gap and connect all parts of the business, as well as interpret the numbers meaningfully.
  3. Their rigor in analysing financial information may spill over into the non-financial aspects of the business. Specifically, as the availability, quality, and comparability of ESG data becomes more key, accountants can play a central role in ensuring the credibility of, and hence trust in, ESG and sustainability data.
  4. In closing, I would like to once again laud MIA for the efforts and focus on promoting climate change and sustainability in the Malaysian accounting space. Thank you for your attention. May you have an impactful and productive conference ahead.

Thank you.

Abdul Wahid Omar
02 September 2021.