Yang Berbahagia Datuk Bazlan Osman, Vice President,
Malaysian Institute of Accountants
Yang Berusaha Dr Wan Ahmad Rudirman Wan Razak, Chief
Executive Officer, Malaysian Institute of Accountants
Members of the Media;
Ladies and Gentlemen
Assalamualaikum and a very good morning to all
It is a great pleasure to be here today. Many thanks to the Malaysian Institute of Accountants (MIA) for inviting me to officiate and deliver the keynote address at the MIA International Accountants Conference 2022.
I applaud MIA for choosing Leading ESG, Charting Sustainabilityas the conference theme. This focus on ESG and sustainability is timely as we navigate an unprecedented landscape where climate inaction, extreme weather, biodiversity loss and insufficient governance in various aspects of the global economy could lead to social inequity and widened wealth gaps.
And all these ESG risks have been further exacerbated by COVID-19, which in the last 2 years have set back many developing countries’ progress by at least a decade.
And what about Malaysia? In the last two years, the Ministry of Finance (MOF) has been RESPONSIVE to the nation’s pressing needs, particularly through the eight stimulus packages valued at RM530 billion and 2 expansionary budgets in 2021 and 2022.
To future-proof ourselves and the nation, today I would like to focus on MOF’s RESPONSIBLE and REFORMIST stand, and how the accounting profession can support this national aspiration to help the Government re-set the nation on the right (fiscal) track to chart Malaysia’s sustainability journey and build our people and businesses’ resilience. To achieve this, we must become more agile and competent, as well as embrace and incorporate ESG considerations into our policy formulation and business operations.
Let me now share with you the policies supporting our ESG aspirations that the Government has put in place in the last 2 years, even while we were managing the pandemic. I will also share our direction on building a more resilient socio-economic nation moving forward.
The Intergovernmental Panel on Climate Change (IPCC) has warned that failing to reduce greenhouse gas emissions and limit global warming to 1.5 degrees Celsius could make the world uninhabitable. Even before that becomes a reality, there are already risks to global food security caused by the likelihood of crops being damaged due to climate-related calamities.
We ourselves have experienced the effects of climate change not too long ago, through the unprecedented floods in our country. Climate migration will also increase as sea levels rise and inundate coastal states and cities. As such, addressing the risks of climate change will be critical to save not just our environment and businesses, but most importantly, humanity and our own lives!
To transition to a low-carbon economy, build a sustainable business environment and nurture a society that shares its wealth-building opportunities equitably as laid out in the 12th Malaysia Plan, every one of us has a responsibility to work together as a nation.
On this score, among the key eco-friendly priorities laid out by the 12th Malaysia Plan include reducing greenhouse gas emissions to 45% of GDP by 2030 in line with the Paris Agreement; a Comprehensive National Energy Policy to provide long-term direction on achieving Malaysia’s carbon neutrality aspiration and a target for renewable energy to account for 31% of Malaysia’s total energy capacity by 2025.
As for social aspirations, the Plan also specifies that, among others, average household income should reach RM10,000 by 2025 and the economic growth gap to be reduced between the central region and Sabah-Sarawak.
There are many other objectives in the 12th MP that are equally worthy of mention, but my intention today is to highlight that plans and blueprints aside, it is always the annual budget broad policies and specific measures that give life to our longer-term ESG-premised aspirations.
On that score, I am pleased to share that Government is committed to firstly, strengthen sustainability-related financing, which complements the UN Sustainable Development Goals (SDGs) by coordinating initiatives and programmes inculcating the elements of ESG, and which will help make Malaysia a sustainable financing hub.
In identifying existing gaps of financing programmes and projects related to SDGs, among our efforts include:i. (One), at the ministry and national level, via the annual budgets, the MOF has tagged all programmes and projects under the development expenditure to the SDGs. This is also part of our overall effort to embrace the sustainability principle in public spending. In fact, the Government has stepped up its game via the Government Green Procurement (GGP) initiative, a public procurement scheme that takes into consideration standards for protecting the environment and natural resources as well as minimising the negative effects of human activities. In 2020, the GGP was valued at approximately RM590 million, involving 26 ministries. Further, not many are aware that Malaysia is among 10 countries in the world that have fully aligned their national budget measures to the SDGs. I also want to share that we just issued the Pre-Budget Statement for Budget 2023, and we have continued to enable the implementation of ESG-focused development projects and programmes.ii. (Two), the Ministry of Environment and Water, in collaboration with MOF and Bursa Malaysia, will implement the Voluntary Carbon Market before transitioning to the Domestic Emissions Trading Scheme. This is expected to attract low-carbon investments, boost the credibility and international competitiveness of Malaysian products, and provide Malaysian entities with long-term financial resources. The Government has also announced plans to strengthen climate change governance in the country, including the establishment of the National GHG Centre to improve transparency in climate change data and reporting to boost confidence in low carbon investment.
iii. (Three), Bursa Malaysia’s recently proposed changes to the Listing Requirements are aimed at improving sustainability disclosures for listed companies across all sectors. These are also in line with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) Application Guide for Malaysian Financial Institutions, jointly issued by BNM and the Securities Commission in March this year. All these are based on global best practices on ESG and climate reporting, which are critical to monitor and drive action towards meaningful changes.
Most importantly, corporate Malaysia need to make the transition to ESG-focused operations quickly. A study by a global bank in 2021 revealed that by 2025, 70% of multinational corporations (MNCs) will remove suppliers that endanger their carbon transition plan. And these MNCs are expected to exclude 35% of their current suppliers as they transition away from carbon. In short, if Malaysian companies are part of the MNC ecosystem, they risk being excluded from future business opportunities if they do not start to adapt their businesses to ESG practices. And this leads me to the second main strategy involving the SME sector.
Unit 33-01, Level 33, Tower A, The Vertical, Avenue 3, Bangsar South City,
No.8 Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia.
The use of the word ‘Accountant’
In Malaysia, the word ‘Accountant’ is protected as provided for under the provisions of the Accountants Act 1967 which states that no one can hold himself out or practise as an Accountant unless he is registered as a member of the Malaysian Institute of Accountants.
‘The Malaysian Institute of Accountants is committed to the observance and practice of the highest ethical standards of the accountancy profession. All PC holders are reminded that under the MIA By-Laws (On Professional Ethics, Conduct And Practice), no person shall practice or hold out anything on audit/tax services without a license approved by the Ministry of Finance. Every PC holder is therefore expected to comply fully with Section B200.1 to B200.6 of the MIA By-Laws (On Professional Ethics, Conduct And Practice) failing which, you may be held liable for unprofessional conduct and disciplinary action may be taken against you.’