PETALING JAYA: Permodalan Nasional Bhd (PNB) will be allocating RM10bil of fresh capital to invest specifically in “green and transition” assets by 2030.
President and group chief executive officer Ahmad Zulqarnain Onn said the allocation was part of the fund’s commitment to achieve a Net Zero Enterprise by 2025 and Net Zero Portfolio by 2050.
“It is important for us to make a commitment under this framework by having a slice of our portfolio in new environmental, social and governance (ESG)-related investments.
“That is consistent with our desire to shift our portfolio and reduce emission towards our net zero 2050 target,” he said at a media briefing yesterday after the launch of PNB’s Sustainability Framework.
Zulqarnain said the allocation was also an opportunity for the fund to catch the upside of the new sector as more companies were serious in reducing their carbon emissions.
“It is also a signal to the market that ESG investing is an opportunity today. The world is shifting towards a new method of investing to more responsible investing.
“There will be a lot of opportunities in terms of finding new companies and new sectors which are going to be fast-growing sectors.
“For instance, companies that help other companies to reduce emissions are expected to grow. By allocating this, it is about finding the right opportunity for us to ride the upside on this trend,” he added.
When asked if PNB will divest any companies that were not in line with its sustainable framework, Zulqarnain said “divestment will be the last resort”.
PNB is looking at an active role in its ESG and sustainability agenda.
The institutional fund joins the Employees Provident Fund (EPF) and Kumpulan Wang Persaraan (Diperbadankan) (KWAP), which have already committed to making sustainability a component in guiding future investment decisions.
Zulqarnain pointed out that PNB will continue to be a trusted custodian of Malaysian wealth and assets and had a responsibility to lead and effect change to ensure an orderly and just transition to a sustainable economy.
“At PNB, we will work hand-in-hand with our investee companies to develop value creation plans that will ensure sustainable growth of their operational and financial performance.
“There is tremendous pressure nowadays for companies to not just perform financially, but also to integrate ESG aspects into their business.
“We believe that, through our collective effort, this new way of doing business will create meaningful benefits for PNB, our investee companies, partners as well as other stakeholders, and ultimately the millions of Malaysians who have entrusted their investments with us,” he said.
PNB is the country’s largest fund-management company with RM338bil in assets under management (AUM). More than 60% of its AUM is allocated in the Malaysian stock market.
In addition, Zulqarnain said PNB was also seeking to transition itself into a Net Zero Enterprise by 2025 and achieving a Net Zero Portfolio by 2050.
Net zero enterprise is where PNB needs to engineer emission out of its business system.
Zulqarnain explained the key factors for PNB to achieve net-zero enterprise include decarbonisation of electricity usage, energy efficiency building, electric vehicles purchase of carbon offsets assets, and reducing business travel.
Towards this end, PNB has created two new functions, namely, the Investment Stewardship Division and the Enterprise Sustainability Department which are responsible for the overall implementation of the Framework.
“As one of the country’s largest fund-management institutions with approximately 10% invested in domestic companies listed on the local bourse, PNB has a responsibility to navigate the complexities of the ESG journey.
“We believe that more can be achieved collectively and PNB will play a more active role in advancing knowledge and a deeper understanding of ESG, as well as its application and best practices for sustainability,” according to PNB’s chairman Tun Arifin Zakaria.
He stressed that corporate Malaysia had the responsibility to play an important role in meeting the goals outlined in the 12th Malaysia Plan, which is to see Malaysia become carbon-neutral by 2050.