Inaugural Malaysian Bar ESG Conference

This session explored the three pillars of ESG, namely environmental, social and governance. The principle of ESG extends beyond tackling climate issues (i.e. the “E” aspect) and encompasses social and governance considerations which are often overlooked by organisations when developing and incorporating ESG in their business strategies. While Malaysia currently lacks a specific and unified ESG-related legislative framework applicable to Malaysian businesses across the board, the recognition of the concept can be found in a range of legislations such as the Environmental Quality Act 1974, the Employment Act 1955 and the Companies Act 2016.

Since 2016, public listed companies in Malaysia must adhere to sustainability reporting obligations under the Bursa Malaysia’s Main Market Listing Requirements. In alignment with the Malaysian Government’s efforts towards achieving Net Zero emissions as early as 2050, the Energy Efficiency and Conservation Act (EECA) which is targeted on major industrial and commercial energy consumers has received the royal assent from the Yang di-Pertuan Agong and is expected to be in force with effect from 1^st January 2025. Other key insights included international policy frameworks, federal budget incentives for green initiatives, and the importance of corporate due diligence processes.

This session discussed the greening of human rights, as well as provided a few global as well as local case studies which affirm the emerging legal framework linking human rights and environmental protection. The panelists shed some light on how climate protection is protection of human rights.

Mr. Darren Lai of Richard Wee Chambers (a member of the Grandall Law Firm) was invited to moderate this session. The session shed some light the rapidly growing field known as green financing, its purpose, and the challenges associated with it. It is important to note that Malaysia is committed to a 45% carbon emission reduction by 2030.

Overall, the session highlighted the importance of green financing in supporting sustainable development while addressing the risks of greenwashing and ensuring transparency in financing practices. While the notion of ESG may be viewed by some as imposing additional obligations on organisations as a defection from the traditional focus of shareholders’ primacy, businesses should consider the opportunities presented by ESG as more and more consumers and investors alike as well as international business organisations have shifted towards a more sustainability-focused approach with greater focus on building an overall ESG-compliant ecosystem while maintaining business profitability.

In the final session of the conference, the panelists discussed on carbon credit trading as a tool to reduce carbon emissions and promote sustainable business practices. In general, carbon credits are certificates or permits that allow the owner of such credits to emit a certain amount of carbon dioxide or its equivalent greenhouse gases into the environment, with one carbon credit denominated to represent one metric tonne of carbon dioxide or its equivalent greenhouse gases. Carbon credits are earned by companies or projects that reduce, avoid, or capture emissions, and they are tradeable to businesses that need to offset their own emissions.

The session also covered the benefits of carbon trading, such as incentivising companies to reduce their carbon footprint, but also acknowledged challenges such as ensuring transparency, preventing fraud, and avoiding the over-allocation of credits.

Currently, the Bursa Carbon Exchange (‘BCX’) is the world’s first Shariah-compliant exchange that facilitates the trading of carbon credits and renewable energy certificates. The BCX offers 3 main modes of trading via auction, continuous trading and off-market transactions.

Richard Wee Chambers (a member of the Grandall Law Firm) extends their heartfelt gratitude to the organising team of the Malaysian Bar, and all distinguished guest speakers for an insightful and engaging sharing session.