Businesses in Malaysia, like elsewhere, spill much ink in extolling the virtues of going green. Many stop at that.
Just look at the voluminous annual corporate social responsibility reports produced by companies and you learn, very quickly, why environmental degradation happens.
There is something promising happening in Malaysia that may compel companies to put their money where their mouth is, as the saying goes. Called Climate Change and Principles-based Taxonomy (CCPT), it is essentially a means to make transparent climate-related financial disclosures by financial institutions.
A multi-party effort led by Bank Negara Malaysia (BNM), CCPT began to get public attention when BNM issued it as a discussion paper on Dec 27 last year. The idea is older, perhaps as old as the Paris Climate Accord of 2015. Or older.
But that is not the point. The point, however, is how Malaysian financial institutions, and by extension other businesses the institutions help finance, will help arrest climate change. Malaysia is one of the 197 countries that signed the Paris agreement, committing the country to reducing greenhouse carbon emissions.
According to BNM's discussion paper, Malaysia has pledged to reduce greenhouse gas emissions intensity of gross domestic product (GDP) by 45 per cent by 2030 relative to emissions intensity of GDP in 2005.
Businesses in Malaysia, not just the financial institutions, must help make Malaysia's pledge to mitigate climate change possible. If all goes well, CCPT may be able to help direct private capital and finance towards environmentally sustainable economic activities.
As BNM points out, Malaysia's pledge means not only clean energy, but also energy-efficient technologies. If Malaysia is to meet the 2030 target, our economic actors must head the clean, efficient energy way.
Our not-so-climate-friendly "brown" companies must become "green". And with all haste, too. Do the businesses have a choice? The simple answer is no. There are two reasons for this. One, remaining "brown" has risks of causing climate change events. Companies' assets and reputation will be put at risk. Laws may change and make staying "brown" expensive. Legal claims and litigation may add to the cost of doing business.
Two, with people's preference shifting to climate-friendly products and services, the "brown" companies will eventually have to go out of business. Encouragingly, CCPT, in country and region-specific nomenclature, is a worldwide effort.
After all, climate change is a global event. Such efforts come as countries prepare to submit their national decarbonisation plans. If we want to live in a world that is only 1.5°C warmer, then the way we do business and the way we live must change. Covid-19 has helped in a perverse way. The way we live has changed. And so has the way we conduct our business.
But mitigating climate change requires even more drastic changes. COP26, the United Nations climate change conference, to be held in the United Kingdom next year, is already wearing the "net zero" badge proudly. We have some years to go before we can claim the badge, but if International Oil Daily is right, Malaysia's national oil company, Petronas, is reported to be eyeing 2050 as a net zero target.
For the others, the CCPT that mandates disclosure of environmental targets against economic activities, done well, will certainly nudge them there. Green finance has a way to turn "brown" green.