U.S-Penang ties prospering, ESG helps
PRIYA PUBALAN15 Apr 2023 10:15am
About nine months ago, the U.S Embassy visited Penang to discuss ESG practises besides investment and employment opportunities in the state - FILEPIC
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The ESG has become a critical aspect that companies cannot ignore these days if they want to succeed in the long run because investors are now vigilant into selecting their portfolios before dumping their money in any company.
ESG has taken prominence in companies whereby it is still skewed towards increasing shareholder value, but in actual truth it is not about increasing the value of a company, but to integrate sustainability in the day to day operations.
Sustainability is an essential pillar in a company as it creates value for people, nature and climate beyond business profit margins.
About nine months ago, the U.S Embassy visited Penang to discuss ESG practises besides investment and employment opportunities in the state.
Ambassador McFeeters said the U.S-Penang cooperation was focused on initiatives to promote ESG standards in the companies in Penang besides learning the future growth plans and support for high-skilled jobs in the state.
About two weeks ago, it was reported that Penang has managed to clock up RM13.7 billion in approved manufacturing investments from January to December last year.
Invest Penang said the state received RM9.7 billion (71 per cent) in foreign direct investments (FDI) and RM4 billion (29 per cent) in domestic direct investments (DDI) for manufacturing in 2022.
"The investment inflows in the said year involved 135 projects and are expected to generate 15,752 new job opportunities in the state,” the statement reads.
Invest Penang said that state is the second-highest contributor among all states in Malaysia’s approved manufacturing investments in 2022 with a 16 per cent share.
This shows that Penang is a preferred state for investors in the manufacturing sector and when it comes to sustainability, the adoption of ESG practises is well done within the state.
It was reported that Ambassador McFeeters met with Invest Penang in last year August to further understand Penang’s current business climate, its approach to investment challenges and opportunities, as well as the adoption of ESG standards.
Sinardaily made a quick check with Penang State Government if ESG practices is being embedded in the state as planned, the Chief Minister revealed that many multi-national companies (MNCs), including those in the FTZ Bayan Lepas, have been long practicing the ESG standards internally within their operations.
However, there is a strong need to look into Scope 3 emissions, which are the indirect emissions produced along the firm's supply chain.
Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organisation, but indirectly affects in its value chain.
In this case, the perfect example would be the small-medium enterprises (SMEs) in Penang which are recognised as the bloodline of the state’s economy.
CM Chow Kon Yeow said that many SMEs are the main suppliers to the MNCs and the state is currently housing more than 350 MNCs and 4,000 SMEs.
“The adoption of ESG practises in the MNCs in Penang are doing well internally due to the standards set by their central headquarters in their home countries.
“However, the importance here must be given to the local SMEs to embrace ESG. SMEs should be seen as an opportunity, instead of threat to remain competitive and continue to attract foreign investors,” he told the Sinardaily, when contacted.
Chow quoted the Penang Green Industry Programme (PGIP), a government-related ESG initiative launched by Penang Green Council (PGC) last year, was a move to further enhance the continuation of sustainability in the state.
He urged all SMEs to start initiating such practises within their organisations while larger MNCs should communicate with their supply chain and clients about their expectations on ESG.
PGIP is also known as the Penang Circular Economy and Industry Programme, aimed at reducing environmental impacts of production and consumption within the manufacturing sector. In other words, to transform Penang into a Green Manufacturing Hub.
PGIP is a one-stop centre that creates a conducive ecosystem that support businesses in their ESG journey, and ultimately propels the state towards becoming a sustainable business hub.
“The PGC is working with various stakeholders including MNCs, large local companies and associations in Penang to promote green and sustainable manufacturing, particularly through partnership with local SMEs,” he added.
A quick check on the Invest Penang website showed that there are close to 100 American-based MNCs in the state.
Conclusively, Penang embedding into ESG adoption in a serious manner will be able to attract more capitalist to consider the state as preferred destination for investments.
Let us hope that the U.S-Penang relations will strive to add value and strengthen the investment ties between the duo.
The views expressed in this article are the author's own and do not necessarily reflect those of Sinar Daily.
