Climate Governance Malaysia: Investing in Regional Climate Resilience - IslamicMarkets LIVE Briefing Note

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1. Industry Series Wednesday - 16 December 2020 Climate Governance Malaysia - Investing in Regional Climate Resilience Climate change is “everyone’s business” and there are adequate opportunities to enhance knowledge, exchange technologies, and encourage behavioural changes to contribute to the transformation needed to overcome the climate crisis. There is a lack of a common definition of what economic activities would be regarded as environmentally friendly amongst the business community, with some corporates engaged in greenwashing with no real or actual environmental impact through their activities. We have to keep our voice high and loud in the right chambers and find the champions in the Government who will take the climate debate forward. T he Climate Crisis is Real: Datin Sunita Rajakumar initiated the session highlighting that businesses across the globe are under pressure more than ever before to assess and disclose their climate opportunities and risks, with investors demanding strict targets and credible transition plans in line with best practices to protect the planet such as balancing absolute emissions with suitable carbon offsets, managing risks at the Board level, and executive compensation for the achievement of targets. Rajakumar added that investors are now more vocal in the transition, which requires corporates to link responsibility, accountability and sustainability together. Rajakumar stressed the need for climate change initiatives to come from the top, suggesting an “all of government and all of society” approach. The world needs to do better than meeting expectations of the Paris Agreement, given that newer climate models suggest 2.8 degrees Celsius of warming, and that all countries are not meeting their stated commitments. On the road to COP26 set for Glasgow in November 2021 and the need to focus on climate change becoming stronger, Rajakumar added that Malaysians have a real opportunity to engage with its government and all key stakeholders to take concrete steps towards building resilience, adjusting to stakeholder needs, and meeting the changing requirements of clients and customers. Rajakumar then invited Tan Sri Dr Jemilah Mahmood to deliver her keynote address. Dr Jemilah stressed that the climate crisis is real and present. She shared some eye-opening statistics to reiterate the need for climate change initiatives. For instance, four of the five most active years on record have occurred within the last 15 years, indicating an underlying trend that the world is getting hotter. Touching on COVID-19, Dr Jemilah remained in awe at the urgency with which governments, businesses and societies around the world have been dealing with the pandemic and inquired why these parties have not been as committed to the climate crisis as they have been responding to COVID-19. According to Dr Jemilah, COVID-19 is an immediate threat and prevalent in the media as it has its roots in politics, with political behaviour generally driven by public demands and the influence of politicians on their electorates. Dr Jemilah then explained the reality of the COVID-19 crisis in Malaysia and across the ASEAN region, whereby, the surge in cases is linked to economic migration and fast disorderly urbanisation, resulting from population displacement as people seek better economic prospects. She highlighted that these are all issues of the present and not of the future, whilst noting that disasters such as trans-boundary haze, forest fires, droughts and floods, which are often perceived as “natural”, are in fact the result of human activity and its effect on the planet. Combining these self-inflicted occurrences with actual natural disaster DATIN SUNITA RAJAKUMAR Founder Malaysian Chapter of the World Economic Forum’s Climate Governance Initiative threats such as earthquakes, tsunamis and volcanoes that are common across Indonesia, the Philippines and Myanmar, Dr Jemilah stated that society is far from ready to tackle these challenges, whilst adding that the movement towards preventing climate change is slower than it needed to be. Building Climate Resilience in the Region: Reiterating the political push, Dr Jemilah stated that Bank Negara Malaysia (BNM) has outlined five principles supporting the classification of business activities to move towards climate risk mitigation. Dr Jemilah insisted that it is more important for these initiatives to seep into Board-level discussions and for corporates to have the decision-relevant data to enable them to systematically identify climate risks in both physical and transitional terms. She highlighted that, as the COVID-19 pandemic takes prominence in the region, it is a prime opportunity for ASEAN nations to step up and lead the buildup of climate resilience in the region. She outlined four key focus areas for ASEAN nations to consider in light of her own experiences. First, Dr Jemilah stated that the climate crisis can no longer be looked at from a nationalist perspective, as pandemics and disasters do not “respect borders”. Therefore, a collective effort is needed to address these challenges. Second, ASEAN nations need to step away from the “ASEAN way” of consultation, quiet diplomacy, consensus-based decision-making, and the ever-present principle of non-interference, to build a cohesive new engagement strategy that remains forward-looking. Third, the lack of regional architecture to address climate change issues should be addressed especially that climate change is yet to be seen as a key priority on ASEAN’s security agenda. Fourth, all sectors need to come together to solve these issues, and ASEAN is perfectly designed to facilitate this by determining the impending threats to regional security, working closely ASEAN Independent Council of The Wise TAN SRI DR JEMILAH MAHMOOD Special Advisor Prime Minister of Malaysia on Public Health, Government of Malaysia DATO' SERI JOHAN RASLAN Director Institute of Corporate Directors Malaysia with the business community to future-proof regional businesses, seeking regional cooperation on renewable energy generation, and engaging closely with civil society organisations to prepare the people for what is to come. Dr Jemilah also proposed the implementation of a Council of the Wise, a cross-border and independent body comprising Heads of State, that will work closely with ASEAN working group on climate change initiatives, review and propose improvements to ASEAN’s political and operational systems. Moving Forward Strategies: In the interview session led by Dato’ Seri Johan Raslan, Dr Jemilah stated that complacency of smaller countries, similar to the likes of Malaysia, is not the way forward. It is crucial to set commitments in place and policies to follow, with actual targets that Malaysia can move towards, along with climate technology to provide a systematic approach in dealing with the climate crisis. She also stressed on introducing concepts of climate awareness and sustainability in the primary education system, with children learning about ideas, such as recycling and climate protection from an early age. Citing Japan as an example, Dr Jemilah explained that building this culture from within would help create a generation that inculcates the concepts of climate protection and knows exactly what to do in order to protect the environment. Dr Jemilah also urged businesses to take a stand in the move towards climate action because it is not solely the responsibility of governments. There is a strong need for sustainable business practices where significant gains will be obtained in terms of returns on investment. She also called on corporate leaders to push climate protection onto Board agendas, stating that climate resilience implies longer-term sustainability of not only the environment, but also businesses. Climate risk is a very real threat and issues such as rising sea levels stand to physically affect businesses in island nations, for instance, Malaysia, Indonesia, the Maldives and the Pacific islands, where businesses along coastal lines are likely to be submerged in water in the years to come. Moving onto individual lifestyles, Dr Jemilah explained how a vegan lifestyle also has its part to play in combatting climate change issues, citing that it takes 5,000 litres of water to produce a Quarter Pounder burger alone, from farm-to-table. Dr Jemilah noted that businesses too were realising this shift in consumer behaviour and are taking steps to address it. Conduct a horizon scan for macro threats and challenges posed by climate change, health, urbanisation and other socio-economic factors. Review and propose improvements to ASEAN’s political and operational systems and architecture to address these threats. Liaise with the ASEAN Working Group on Climate Change and other climate-and disaster-related bodies. Concluding the discussion, Raslan summarised the key takeaways from Dr Jemilah’s address, stating that corporate Terms' leaders need to take the initiative regardless of the size of Flexibilitytheir businesses, that the education system needs to Remain as a permanent develop programmes to build a new generation embedded Relationship advisory body to ASEAN Reciprocity with a culture of sustainability within them, that people building on ongoing implemenneed to voice their concerns as this can invoke action from tation and review for top-level authorities, and lastly, it is not too late to make a positive, long-lasting change. selected disaster and crisis-related issues. Watch again on IslamicMarkets.com