Businesses need to adopt sustainability practices to survive - Climate Governance Malaysia

01 Aug 2023 04:25pm

Climate Governance Malaysia (CGM) council member Dr Gary William Theseira said with the central bank and the government coming up with regulatory frameworks, banks have started to also disassociate themselves from high carbon activities and are unlikely to provide financial support to businesses that pollute the environment. - Climate Governance Malaysia (CGM)

PETALING JAYA - Businesses have to become more aware about adopting sustainable practices in their operations in order to survive and how to get loans from banks as regulatory environmental settings become more apparent.

Climate Governance Malaysia (CGM) council member Dr Gary William Theseira said with the central bank and the government coming up with regulatory frameworks, banks have started to also disassociate themselves from high carbon activities and are unlikely to provide financial support to businesses that pollute the environment.

"One of the ways is by using taxonomy to rate loan applications. For example, if there is a negative implication on the environment, a loan can (still) be given but at a higher rate of interest and shorter repayment terms.

"So the government, through the financial regulator, is helping banks to filter out economic activities," he told the media at the Third International Green Build Conference (GBC 2023) here, today.

Meanwhile, commenting on greenwashing, the World Bank’s Asia Foundation climate consultant and climate specialist Darshan Joshi said some businesses tend to "cheat” their way into achieving their target as going into the low carbon space is not cheap.

"This (greenwashing) is something we all have to keep a close eye on. This is a challenge but the academia and even the media have a role to play. Understand what greenwashing is, how to identify it and bring the issues to light, especially when carbon crediting becomes a big component of companies with low carbon action plans," said Darshan.

Nonetheless, he said Malaysia has been positive about carbon pricing as companies like Petronas, Tenaga Nasional, Khazanah Nasional and the Sunway group have implemented their own internal carbon pricing mechanisms.

"Once the government has a mandatory carbon tax, these companies will be ready and they will know how to make effective decisions. Basically, these companies are getting a head start on future regulations and this will make their journey easier," said Darshan.

He also said Asean countries have started to take steps to achieve net zero emissions and will eventually look into carbon pricing.

There could be an integration on carbon pricing instruments but this is likely to be beyond 2030, Darshan said.

"Then the incentive to decarbonise will be equal across Asean. But until then, it is (still) early to determine carbon pricing as Malaysia and the region are still learning," he said.

There are 70 countries with their own carbon pricing mechanisms currently compared with only 12 in 2012, he said. - BERNAMA