THE practice of sustainable investing has certainly come a long way since the Industrial Revolution two centuries ago.

       The rapid changes in technology, society and the economy in the digital age, along with the disruptions brought about by the ongoing global health crisis and climate change, have further highlighted the urgent and growing need for businesses and corporations to adopt sustainable, responsible and resilient investment practices in line with Environmental, Social and Governance (ESG) principles for the mutual benefits of the people, planet and profit.

       As a long-term investment platform, ESG is particularly relevant to Real Estate Investment Trusts (REITs) in delivering sustainable returns to unitholders in the present and future.

       Moreover, with investors, regulators and consumers increasingly focused on sustainability, REITs are also actively transforming the way business is valued, conducted and perceived.

       As the owner and manager of many of the largest and most iconic assets in the country, supporting tens of thousands of businesses and serving millions of Malaysians, Malaysian REITs (M-REITs) are proactively incorporating ESG principles in line with the United Nations Sustainable Development Goals (UNSDGs).

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       These efforts, spearheaded by various M-REITs, have been recognised locally and internationally, with a number of accolades won in recent years (see table).

       With a key role in contributing to the national real estate landscape and economy, M-REITs aim to bring about positive impact to the community, society and nation beyond creating and growing long-term value for stakeholders.

       On the highest level, the environmental aspect of ESG is especially pertinent to the building industry, and many M-REITs are progressively adopting a multi-pronged approach of eco-friendly planning, reducing wastage and emissions, as well as improving energy efficiency with the use of sustainable resources and technologies.For example, Sunway REIT has many of its prime investment assets in Sunway City Kuala Lumpur (SCKL), a model low-carbon city with holistic urban and mobility planning accorded Diamond status by the Environment and Water Ministry.

       Committed to reducing greenhouse gas emissions and achieving carbon neutrality by 2050, SCKL is also Malaysia’s first Green Building Index certified sustainable city.

       KLCC Park, near the landmark Petronas Twin Towers, managed by KLCCP Stapled Group, has also been accorded the world’s top urban park (silver award) at the International Large Urban Parks Award 2020.

       Designed as botanical heritage that promotes environmental conservation and biodiversity, KLCC Park currently houses more than 1,700 indigenous trees and 66 species of palms, playing a pivotal role in promoting social well-being, enriching experiences, and bridging the community as well as providing a touch of greenery for buildings within the KLCC Precinct.

       Sustainable finance: The real greenback

       In the World Investment Report 2021, the United Nations Conference on Trade and Development estimated that the value of sustainability-themed products in global capital markets grew 80% between 2019 and 2020 to US$3.2 trillion (RM13.26 trillion), indicating the substantial growth of investor interest in ESG investments.

       As such, financial institutions have been proactive in incorporating ESG initiatives in their growth strategy by introducing new sustainability-linked products and channelling their capital into emerging areas such as green financing.

       Recently, Sunway REIT has become the first M-REIT to venture into sustainable financing in collaboration with OCBC Bank (M) Bhd with the proposed Sustainability-Linked Bond issuance under Sunway REIT’s existing RM10bil medium term note programme, a milestone in the M-REIT industry which could be emulated in the continued push towards greater heights.

       ESG: A collaborative effort between all stakeholders

       In line with the global mega trend, the government, regulators and professional bodies, among others, have also been actively promoting, guiding and supporting the move towards ESG.

       In the recently announced 12th Malaysia Plan, the government has outlined the country’s commitment to become a carbon-neutral nation by 2050, aligned to the 2030 agenda for sustainable development, of which sustainability advancement is one of the three core themes.

       Since 2014, Bursa Malaysia has also partnered with FTSE Russell to provide more visibility and recognition of ESG-compliant companies via the FTSE4Good ESG Index, with the subsequent publication of the sustainability reporting guide in 2015 to facilitate the integration of sustainability principles for listed issuers, which is complemented by the sustainable and responsible investment roadmap launched by the Securities Commission in 2019 which charts the role of the capital market in driving sustainable development in Malaysia.

       The Malaysian Institute of Certified Public Accountants has also established the national annual corporate report awards to recognise corporates with the best global reporting frameworks, where non-financial information, forward-looking statements and disclosures on sustainability are transparently communicated to investors and the public.

       M-REITs comprehensively assess and disclose

       In line with Bursa Malaysia’s requirement to include a sustainability report in the annual report, M-REITs assess and disclose their ESG-related risks, opportunities and achievements to engage stakeholders in the collaborative journey of sustainability.

       To further improve the ESG disclosures and framework by publicly listed corporations, Bursa Malaysia also requires a sustainability statement to be included in the annual report, to assess and disclose their ESG-related risks, opportunities and achievements to engage stakeholders in the collaborative journey of sustainability.

       In time, the ESG initiatives have the potential to grow further, driving long-term productivity, optimising costs and enhancing brand value for businesses and improving the overall well-being of the nation and the environment.

       The initiatives will also be attractive to local and international investors who would be able to enjoy investment returns with a positive purpose.

       As such, Malaysian REIT Managers Association (MRMA) lauds the efforts by all stakeholders in supporting the sustainability agenda, and will continue to push for a higher standard on sustainability related initiatives.

       Sustainability for good

       As the saying goes, “the present is a gift to be treasured for the future”, sustainability is a social responsibility and an investment for the betterment of generations to come. As corporate citizens of the country, M-REITs will continue to champion the principles and values of ESG to build a sustainable future for all.

       Datuk Jeffrey Ng is immediate past chairman of MRMA and CEO of Sunway REIT Management Sdn Bhd. The views expressed here are the writer’s own.