This blog post was first published in Focus Malaysia, New Straits Times and Business Today.

Asia’s GDP is poised to shrink by more than 26% by 2048 if no action on climate change is taken, according to an Ecosperity report. Many countries today are acutely aware of the price of inaction and the urgent need to tackle climate change and environmental degradation.

Malaysia is no exception as it takes on a whole-of-nation approach to sustainability reflected in the Shared Prosperity Vision 2030, Renewable Energy Policy and Action Plan, and 12th Malaysia Plan – all of which are aligned with the 17 United Nations Sustainable Development Goals (UNSDG).

Today, more Malaysian businesses and organizations are rising to the occasion by stepping up their Environmental, Social, and Governance (ESG) efforts. Significant developments have taken place recently, including Bank Negara Malaysia’s guidance on climate change and principle-based taxonomy to elevate climate considerations in financial institutions. Several Malaysian organizations – including KWSP, PETRONAS, Maybank, and Malaysia Airlines – have also set net zero targets by 2050. Many others have made pledges to reduce carbon emissions and reduce their environment footprint.

While progress is underway, the question remains – is it fast enough or is it substantial enough to steer our world away from the climate tipping points? A 2022 Malaysia Business Sustainability Pulse Report finds that less than 20% of Malaysia’s private sector have set commitments to sustainability initiatives. Close to half (46%) of Malaysian companies have not allocated a budget for their sustainability programs.

To truly drive significant, meaningful progress, Malaysian organizations first need to recognize the obstacles in their sustainability journey and formulate considered steps to overcome them. This will be crucial in enabling the companies to move beyond sustainability pledges and make tangible progress.

Recognizing the barriers in enterprises’ sustainability journey

In the face of today’s unprecedented global challenges, it is understandable that business leaders can be easily overwhelmed by ambitious sustainability targets. As organizations face immense pressure to perform amidst rising economic concerns, they are often tempted to postpone or forego new business initiatives. Unfortunately, sustainability programs tend to be among the first to be sacrificed.

While sustainability and decarbonization are top-of-mind for investors, many new projects lack sufficient incentives to meet the threshold return in the short-term and deliver in-year returns. This might cause many of such projects to be shelved or cancelled as companies become more prudent in their spending.

Moreover, sustainability is an uncharted territory for many leaders, which can give rise to issues they’ve never faced before. For instance, the transition to cleaner energy sources will require serious planning to ensure the phasing out of old energy sources – such as coal or oil – does not disrupt operations. Consequently, many sustainability efforts from the business community often sojourn at the initial stages. While it may be tempting to withdraw or withhold funding for these projects, the long-term sustainability of the business would depend on these initiatives to be incubated and scaled.

From pledges to progress: Effective strategies for sustainability
A solid first step that Malaysian business leaders can take in their sustainability journey is the change in perspective. Stakeholders would need to take a view that sustainability does not necessarily detract from business goals. Many need to start seeing sustainability efforts as an investment in their future and not as a mere obligation or public relations exercise.

There are many ways sustainable practices can benefit fundamental company goals, including: catalyzing operational efficiency, satisfying stakeholders’ expectations, evolution of new business models, and promoting greater compliance with regulations.

In addition to shifting mindsets and perspectives, there are also actionable strategies that organizations should consider to integrate sustainability into their company’s DNA and drive better sustainability outcomes:

1. Drive accountability among leaders/cultivate a green culture: The sustainability agenda needs to start from the Board and their shareholders, the CEO and executives, and with input from the bottom-up. It can start from as simple as setting the tone and strategic importance organization-wide, which later translates into actions that embed sustainability into business decisions made. This is a great way to build momentum towards sustainability that permeates throughout the organization – encouraging higher employee awareness and ownership of sustainability goals.

2. Build a clear sustainability roadmap: Each organization has unique challenges, opportunities, and business objectives. A clear roadmap should take these factors into account. By understanding where your organization stands in terms of sustainability, an advisor or consultant can provide customized solutions that are practical and achievable. This approach can also help organizations prioritize their efforts and set realistic targets, leading to more effective implementation and tangible results.

3. Embrace digital strategies: Digital is paramount to sustainability objectives. Putting investments in the right digital tools and technologies that support achieving your green mission will accelerate ESG efforts. If your organization is unsure where to start, moving to cloud can be the first foundational step from a technology standpoint or starting to measure energy spend could be another approach.

4. Prioritize a consistent and long-term journey: Sustainability is a process, and like all innovative transformations, has no definite endpoint. Rather than fixating on elaborate future targets, it is more efficient to take small and practical steps. For example, just by being aware of how much carbon your software is producing can enable you to make better decisions that will in turn lead to measurable goals.

Race to secure a greener future
As key pillars in the Malaysian economy and society, the business community holds immense potential to spearhead sustainability efforts. There is more that can be done by collaborating and engaging with stakeholders. In particular, taking action to build muscle in the usage of data and digital to rapidly prioritize and iterate sustainability initiatives.

Ultimately, the race for the future belongs to those who move quickly and take decisive action towards a more sustainable world. By turning pledges into tangible progress, Malaysian businesses can become a force for change and lead the way towards a greener and more prosperous future for the nation.

Find out how Avanade is helping organizations move forward towards a more sustainable future.