PETALING JAYA: Khazanah Nasional Bhd has committed to achieving carbon-neutral operations by next year, following the launch of its sustainability framework and targets.

       In addition, Malaysia’s sovereign wealth fund aims to achieve net-zero emissions by 2050, in line with the national level commitment and the 1.5 degree pathway of the Paris Agreement.

       Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, who officiated the launch, believes the sustainability megatrend cannot and should not be overlooked. According to him, the world is at a “crossroad”.

       “If we do not correct our course to avoid potential climate disasters and societal inequalities, we will have failed in our role as stewards for future generations,” he said during his speech, adding that it was not an issue that could be ignored, with the increasing impact of extreme weather events in Malaysia.

       “Concerns about the welfare of factory and plantation workers have repeatedly made headlines in the press, tarnishing our international reputation.

       “Both these issues have serious implications to Malaysia, its institutions, its businesses and, most importantly, its people,” he added.

       He said the international investment community was increasingly focused on environmental, social and governance (ESG)-related risks and opportunity.

       “Global funds, for example, do not shy away from divesting in companies with unsustainable practices, encouraging the latter to embrace ESG to ensure they do not lose access to capital,” he commented.

       Meanwhile, Khazanah managing director Datuk Amirul Feisal Wan Zahir said: “To execute a coherent response to sustainability, we will adopt an all-of-Khazanah approach – covering all aspects of how it behaves as a responsible investor, as a sustainable organisation, and as a good corporate citizen.

       “This means that sustainability is embedded into everything that we do – from how we manage our investments, to how we operate as a firm, to how we support and contribute to the societal development objectives of the nation,” he said, adding that the focus will be on sustainable investing and enterprises sustainability.

       For sustainable investing, the group’s effort is said to vary depending on the size of investments.

       For investments of significant stakes, the group has a role to be more active in stewardship and advocacy as a shareholder, while for investment of smaller stakes, the group will ensure investee companies are committed to ESG transition plans.

       “All of our investment actions are geared to manage risks around the material ESG issues at the portfolio, asset class and company level,” Amirul Feisal said.

       “We will embed sustainability into our day-to-day work – such as our own energy usage and consumption patterns, as well as travel practices,” he said speaking about enterprise sustainability.

       Amirul Feisal said the group must ensure that its strategies and plans were rooted in deep research, and must engage meaningfully with all stakeholders, including government bodies and civil society to better understand the implications of the group’s actions.

       “Due to the complex and diverse nature of the companies in our portfolio, we recognise that there is no one-size-fits-all approach that can be responsibly applied across the board,” he said.

       Therefore, the group will take up a more collaborative approach to understand its portfolio companies transition plans, while supporting them to shift for a more sustainable business model.

       “This is not to say that we will be relaxed. On the contrary, we will demand swift action and earnestness to transition,” he said.