KUALA LUMPUR (June 23): Companies should consider setting up a sustainable unit or department to help them better understand the elements of the sustainable and responsible investment (SRI) and environmental, social and governance (ESG).
Malaysia Venture Capital Management Bhd chairman Tunku Alizakri Alias has said creating driven leaders and talent is essential to creating goals for the organisation and in identifying sustainable metrics.
"The younger generation are driven by solutions, and by giving them a purpose, which links back to profits [which] do not harm the planet and also the people, we will see the impact in our children's time," he said at the SRI Virtual Conference 2022 titled "Preserving the Climate through Sustainable Business and Living" on Thursday.
Tunku Alizakri, who is former Employees Provident Fund (EPF) chief executive officer (CEO), said a meaningful key performance indicator (KPI) is also crucial to drive value and the best interest of the company.
"When you set KPIs to your chief executive officer, break it down into two. The first thing is revenue — show me the revenue that comes from sustainable practices and new business.
"So, it forces your CEO and your team to start thinking about how to generate revenue from this.
"[Then] from the cost perspective, how do we reduce costs by reusing or recycling — putting a dollar value to it, which is directly linked to sustainability," Tunku Alizakri said.
He said companies also need to keep in mind that the government has set a target of becoming a zero-carbon nation by as early as 2050 and they should find solutions.
"In order to achieve the target, it is extremely likely that the government will be imposing a carbon tax, so you'd better know how much carbon and or greenhouse gas emission you are emitting because once the regulations come into play, you'll have all the things that you need to manufacture or to provide the services in the business you are involved in," he added.
He said the reporting aspects also need to be emphasised to ensure companies have their direction ready and to instil confidence over their ESG commitments.
According to him, an insidious area is the weaponising of ESG by bigger economies to block or reduce the impact of other countries' production "especially when you are employing a lot of foreign labour".
Tunku Alizakri, who sits on Sime Darby Plantation Bhd's board, pointed to the US Customs and Border Protection's (CBP) actions against the local glove and plantation industries.
"For example, Sime Darby Plantation is one of the companies with the highest level of social governance in taking care of foreign labour but it was just ignored [by the foreign authorities].
"So, for those of you who have not been targeted yet, I strongly suggest you start [preparing] now, so you'll be able to quickly present it out to the international regulators, instead of being stuck for months."
On Dec 30, 2020, the CBP issued a Withhold Release Order against Sime Darby Plantation's palm oil products over allegations of forced labour in its palm oil production.