Malaysia making progress on climate governance front

PETALING JAYA: Malaysia is strengthening its climate governance and sustainability framework with a laser focus on sector-specific actions, green finance and regional colla-boration.
Climate Governance Malaysia (CGM) Council chairman Dr Gary Theseira (pic) outlined how Malaysia is positioning itself as an Asean leader in environmental, social and governance (ESG) transition, underpinned by policy alignment, financial innovation, and corporate participation.
'The energy sector remains the top contributor to Malaysia's greenhouse gas (GHG) emissions, accounting for more than 79% of total emissions, according to the Initial Biennial Transparency Report 2024.
'This includes power generation and transportation, both heavily dependent on fossil fuels. To address this, Malaysia's National Energy Transition Roadmap (NETR) is crucial. It prioritises the move from fossil fuels to renewable energy sources such as hydroelectricity, solar photovoltaic (PV), and emerging technologies like biomass gasification and Ocean Thermal Energy Conversion (OTEC).
'The urgency to decarbonise the national grid goes hand in hand with the rapid electrification of transport and net-zero targets by corporations,' he told SunBiz.
He pointed to the rise of 'behind-the-meter' solar PV solutions, which allow users to generate electricity on-site, easing the burden on the national grid while accelerating decarbonisation.
'However, Malaysia's climate strategy doesn't stop at emissions reduction. Equally vital is the preservation of natural carbon sinks. The Land Use, Land Use Change and Forestry (LULUCF) sector plays a pivotal role, seques-tering over 212 million tonnes of CO₂ equi-valent annually.
'Protecting forests and urban green spaces, which not only absorb carbon but also regulate temperature and humidity is important,' he stressed.
Additionally, Theseira noted that small and medium-sized enterprises (SMEs) are another essential component of Malaysia's ESG journey.
'As key players in corporate value chains, their emissions data significantly influence major corporations' Scope 3 disclosures under the National Sustainability Reporting Frame-work (NSRF).
'Tools such as the Simplified ESG Disclosure Guide (SEDG) and the GHG Protocol have made it easier for SMEs to assess and report their emissions, contributing to a more transparent and accountable corporate landscape.
'Private investment in green projects remains a challenge, largely due to policy uncertainty and a lack of ecosystem support. Clear, coherent, and impactful government policies are essential to encourage long-term planning and investor confidence,' he said, adding that governments must foster resilient ecosystems and incentivise sectors aligned with climate goals to attract meaningful capital flows.
To enhance the appeal of green financial instruments like sustainability-linked loans and green bonds, Theseira stressed the importance of measurable and certifiable impact, in line with government policy, further high-lighting the need for rigorous anti-greenwashing assessments to maintain investor trust, especially among retail investors increasingly concerned about ethical investments.
'Malaysia can also draw lessons from emerging markets such as China, India, and Brazil, which have successfully mobi-lised transition finance through strong policies, international collaboration, and innovative financing models.
'Malaysia should develop a clear transition roadmap, align its disclosure standards with global frameworks, and focus on 'bankable' projects such as grid upgrades and critical mineral development to attract private capital,' he remarked.
Looking ahead, Theseira expressed optimism that now is the perfect moment to harmonise sustainability standards across Asean as the nation is assuming the chairmanship, enabling the region to better compete in global markets and secure its position as a trusted source of sustainable goods and services.
He also expressed optimism about the National Climate Governance Summit 2025, which focuses on transition finance.
'The summit brings together regional stakeholders and global experts, offering a platform to share best practices and forge collaborative pathways toward a low-carbon future,' he said.
Over the next five to 10 years, Theseira envisions Malaysia strengthening its climate governance frameworks and aligning them with global standards.
'With a Renewable Energy target of 70% by 2050 and a net-zero goal by the same year, he called for setting a national emissions peak and peaking window, a move that would signal commitment ahead of COP30 in Brazil and guide policy and industry action alike,' he said.

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