ESG

KUALA LUMPUR, The United Kingdom (UK), in collaboration with the United Nations Development Programme (UNDP) Malaysia, has launched new initiatives to bolster Malaysia’s resilience against climate change impacts. UK Minister for the Indo Pacific Seema Malhotra: Our countries have a long history of working together on the climate and the environment, and today, we are taking that partnership further… The initiatives, unveiled by UK Minister for the Indo-Pacific Seema Malhotra on Monday, focus on using innovative financial tools to attract green investments from businesses and banks for climate-related projects. These joint efforts aim to provide practical, community-based solutions to challenges such as flooding and heat stress. “The UK and Malaysia have a long-standing history of collaboration on climate and environmental issues. Today, we are taking this partnership to the next level,” Malhotra said at the launch, according to a statement from the British High Commission on Tuesday. British High Commission, Kuala Lumpur. Additionally, the UK will partner with Monash University Malaysia on a project that helps local leaders in Selangor make informed decisions on water, energy, and food management. The project will employ economic models to evaluate how developments in one sector, such as hydropower, could impact others, including agriculture and wetlands. Representatives from UNDP Malaysia and Monash University Malaysia attended the launch to exchange grant agreements and outline their project plans. The event marks a significant milestone in UK-Malaysia climate cooperation, ahead of COP30, where Malaysia is expected to take a leading role in shaping regional climate strategies.

HCMC, Vietnam, LEGO Manufacturing Vietnam has entered into a Direct Power Purchase Agreement (DPPA) with Vietnam–Singapore Industrial Park (VSIP), formalising its plan to run its newly launched factory entirely on renewable energy. The deal, which combines large-scale rooftop solar generation with an industrial battery storage system, is being positioned as a pioneering model for Vietnam’s manufacturing sector. Prototype for Industrial Energy TransitionAs one of the first agreements of its kind in Vietnam, the DPPA is designed to stabilise renewable energy supply for large-scale industrial use. Under the arrangement, solar power generated by VSIP will be supplied directly to LEGO’s operations, with battery storage ensuring a consistent supply despite fluctuations in generation. Supported by Vietnam’s Ministry of Industry and Trade and local authorities, the framework is seen as a key step towards scaling clean energy adoption across the country’s fast-growing industrial parks. The signing ceremony was attended by Ho Chi Minh City officials, Denmark’s Ambassador Nicolai Prytz, and senior executives from VSIP. “This marks an important milestone in our ambition to operate the factory entirely on renewable energy,” said Jesper Hassellund Mikkelsen, Senior Vice President of Asia Operations and General Manager of LEGO Manufacturing Vietnam. “We are proud to be among the first companies to sign a DPPA and grateful for the strong support from national and provincial authorities in enabling this initiative.” Nguyen Phu Thinh, General Director of VSIP J.V. Co., added that the project highlights the role of industrial parks in accelerating Vietnam’s low-carbon transition. “By combining rooftop solar with battery storage, we are establishing a new benchmark for reliable renewable power in the manufacturing sector,” he said. Scale and Climate ImpactThe project is expected to reduce approximately 15,000 tonnes of CO2e annually once operations begin in early 2026. It builds on the 12,400 solar panels already installed at LEGO’s Vietnam site, which are projected to cover around 75% of the facility’s energy demand for its first five years. Additional off-site renewable energy agreements are also under discussion to secure the remainder of its supply. LEGO’s Vietnam factory, which opened in April 2025, is the company’s sixth globally and its second in Asia. Designed as LEGO’s most sustainable production site to date, the facility plays a key role in the group’s regional growth strategy. Broader SignificanceVietnam has emerged as a critical hub for global manufacturing, but challenges around energy security and emissions reduction persist. LEGO’s adoption of one of the country’s first DPPAs sets an example for other multinationals aiming to meet ESG goals while navigating Vietnam’s regulatory frameworks. For investors, the agreement demonstrates how foreign corporations are integrating renewable infrastructure into emerging markets. For policymakers, it underscores the potential for industrial parks to serve as catalysts for Vietnam’s energy transition, linking commercial investment with national climate objectives.

L&T Strengthens Sustainable Finance Portfolio with $700M Trade Facility Indian multinational Larsen & Toubro (L&T) has secured a $700 million Sustainability-Linked Trade Facility (SLTF) from Standard Chartered, further enhancing its access to capital linked directly to environmental performance metrics. The transaction follows L&T’s issuance of India’s first listed sustainability-linked bond under the Securities and Exchange Board of India’s ESG Bond Framework in June, reflecting the company’s continued commitment to sustainable financing. Tying finance to environmental outcomesThe SLTF links financing terms to measurable reductions in greenhouse gas (GHG) intensity and freshwater consumption—two key environmental risks for L&T’s heavy industry and infrastructure operations. By embedding these indicators into trade finance, the company aligns with the sustainability-linked loan principles established by the Loan Market Association. Under the SLTF framework, L&T will report annual progress on agreed key performance indicators, with independent third-party verification. Global assurance firm DNV has provided a second-party opinion, validating both the targets and the methodology. This structure mirrors a growing global trend, where corporates are increasingly held accountable for their environmental impact. For investors, third-party verification mitigates reputational risk while transparent reporting strengthens market confidence and addresses concerns over greenwashing. Corporate strategy and ESG goalsL&T has set ambitious targets of achieving carbon neutrality by 2040 and water neutrality by 2035. As a conglomerate with significant energy, construction, and manufacturing exposure, these goals are intended to improve operational efficiency and address regulatory pressures. A spokesperson for L&T stated, “This SLTF underscores our commitment to sustainable business practices. ESG principles are integral to our corporate strategy, guiding investments in low-carbon technologies, resource optimisation, and biodiversity conservation. By demonstrating progress on these metrics, we strengthen investor confidence and ensure long-term value creation.” The company is increasingly linking its financial strategy to ESG performance, recognizing that sustainable finance provides access to lower-cost capital while reinforcing its market reputation. Banking perspective and India’s sustainability agendaFor Standard Chartered, this transaction reflects the expanding role of international banks in supporting India’s corporate sustainability efforts. Shobana Chawla, Head of Sustainable Finance Origination at Standard Chartered India, said, “Through this facility, we are supporting L&T’s decarbonisation journey. Sustainability remains a strategic priority for Standard Chartered, and we aim to facilitate the development of a more sustainable economy in India.” The deal comes amid India’s push for stronger ESG reporting and energy transition policies. With domestic regulators demanding enhanced disclosure and international investors seeking credible sustainability strategies, instruments like the SLTF are becoming increasingly important for bridging capital needs. Implications for investors and corporatesThe $700 million facility positions L&T among the largest issuers of sustainability-linked finance in emerging markets. It demonstrates how corporates can integrate ESG criteria into everyday business operations rather than relying solely on green bonds. For executives and boards, the L&T case highlights that ESG performance is now inseparable from financial strategy. Strong target-setting, independent verification, and transparent reporting can unlock large-scale, lower-cost financing and provide competitive advantages. Global relevanceWhile this is an India-based transaction, its structure aligns with global trends in sustainable finance. Emerging market corporates like L&T play a critical role in global emissions reduction, and access to international capital via sustainability-linked instruments will be crucial for financing large-scale transitions. For policymakers, the deal underscores the importance of robust verification frameworks and consistent disclosure standards. For investors, it provides a concrete example of embedding environmental metrics into financial instruments in high-emissions sectors. As global finance increasingly prioritizes climate-aligned portfolios, L&T’s approach illustrates how ESG credibility is becoming a key determinant of capital access.

A major clean energy pushMalaysia’s Sarawak state has secured one of its largest private renewable energy investments to date, with Founder Group Limited and Planet QEOS Sdn. Bhd. committing MYR1.16 billion (US$2.76 billion) to develop a hybrid solar and energy storage complex in Baram. The project combines a 310-megawatt-peak (MWp) ground-mounted solar farm with 620 megawatt-hours (MWh) of battery storage, designed to deliver continuous, dispatchable electricity. It will be Malaysia’s first project aimed at providing “stable output” solar—power reliable enough to function like conventional baseload generation from gas or hydro. The initiative forms a central part of the state-backed Baram DeepTech Energy Programme, which seeks to transform Sarawak’s interior through advanced energy infrastructure. Powering digital infrastructureThe development will also host a 200 MW Tier-4 data centre park, co-located with the solar and storage facilities. By directly powering energy-intensive digital operations with locally generated renewable electricity, the consortium aims to reduce dependence on fossil-fuel-heavy grids. Authorities anticipate over MYR1 billion in foreign direct investment linked to the data centre campus, positioning clean power as a driver for Sarawak’s digital economy and industrial diversification. Aligning with policy and regional targetsThe project supports Sarawak’s ambition to expand installed generation capacity to 10 gigawatts by 2030. Plans for a Special Energy Zone in Baram are intended to attract green industrial activity while promoting rural economic growth. “The integration of dispatchable solar with storage strengthens Sarawak’s credibility as a regional player in clean energy and the digital economy,” said a government official. Final permitting and a Power Purchase Agreement (PPA) are pending, but the project is seen as a model for future large-scale renewable energy initiatives. Financing and executionNASDAQ-listed Founder Group, active in energy and IT sectors, will lead the consortium alongside Planet QEOS, structuring financing and phasing construction once regulatory approvals are secured. Analysts note that Sarawak’s ability to guarantee reliable clean power at scale could determine its success in attracting the next wave of digital foreign investment, amid regional competition from Singapore and Indonesia. Implications for businesses and investorsFor corporate leaders, the Baram project underscores a broader trend: renewable energy infrastructure is increasingly viewed as the foundation for industrial and digital clusters. Investors will recognize that pairing renewable generation with storage is now critical to secure long-term, high-demand digital projects. The project also illustrates a close alignment of public policy with private capital: linking renewable deployment to a Special Energy Zone and digital infrastructure connects climate targets directly to industrial strategy, appealing to sovereign investors and multinational tech firms seeking resilient, low-carbon supply chains. Regional significanceBeyond Malaysia, the hybrid complex offers lessons for Southeast Asia, where rising electricity demand and competition for data centres and advanced industries are intensifying. A successful implementation could serve as a regional blueprint—combining large-scale renewables with storage to provide reliable, bankable electricity for energy-intensive digital operations. For global companies focused on ESG compliance and decarbonization, such projects may become essential investment considerations in emerging markets.

KUALA LUMPUR, The International Air Transport Association (IATA) and carbon market stakeholders are urging governments worldwide to address the limited availability of carbon credits needed by airlines to meet their obligations under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). In a joint statement released at the 42nd International Civil Aviation Organisation (ICAO) Assembly in Montreal, Canada, on Monday, the signatories called on governments to issue Letters of Authorisation (LoAs). These letters allow the release of CORSIA-eligible emissions units (EEUs) that airlines can purchase. The statement highlighted that timely issuance of LoAs is crucial to creating a transparent and reliable market for CORSIA EEUs, ensuring the scheme’s successful implementation, and maintaining the environmental integrity of aviation’s climate commitments. IATA forecasts that airlines will need between 146 million and 236 million EEUs during CORSIA’s first phase (2024–2026). Currently, only 15.8 million credits from Guyana are available, underscoring the urgent need for more LoAs. LoAs, issued by host countries, authorize the use of carbon credits (Internationally Transferred Mitigation Outcomes or ITMOs) under Article 6 of the Paris Agreement. They ensure emissions reductions are counted only once by applying a “corresponding adjustment” to the host country’s Nationally Determined Contribution (NDC). Without these letters, airlines risk a shortage of CORSIA-eligible credits, potentially undermining the scheme and limiting climate finance for project developers. To help countries issue LoAs, IATA has released guidance, practical tools, and workshops. CORSIA aims to reduce global aviation CO₂ emissions. Malaysia has been voluntarily participating in the scheme alongside 104 other countries since July 2022 and has supported the inclusion of oil palm biomass in CORSIA Eligible Fuel Criteria since 2021.

KUALA LUMPUR, Malaysia aims to make its steel industry fully green by 2050 with the launch of the Steel Industry Roadmap 2035 (SIR2035), a strategic plan addressing overcapacity, import reliance, and carbon emissions. Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said SIR2035 provides a clear pathway to stabilise, restructure, and transform the sector in line with the New Industrial Master Plan 2030, the National Energy Transition Roadmap, and the nation’s Net Zero goals. Future guide: Tengku Zafrul (second from left) taking a look at the Steel Industry Roadmap 2035. With him are (from left) Miti secretary-general Datuk Hairil Yahri Yaacob, Liew and Miti deputy secretary-general Datuk Hanafi Sakri. The roadmap outlines 15 strategies across three phases: stabilisation, transformation, and full transition. In the next two years, the focus will be on managing overcapacity, restructuring licensing frameworks, cracking down on illegal operators, securing domestic raw materials, and laying the groundwork for decarbonisation. From 2027 to 2035, efforts will shift to accelerating carbon reduction initiatives, developing low-carbon production infrastructure, establishing standards, and investing in new technologies. Beyond 2035, the aim is a fully green steel sector by 2050, with talent and capital mobilised to maintain competitiveness, resilience, and alignment with Net Zero commitments. Tengku Zafrul described SIR2035 as “not only a policy document, but also a national contract for a sustainable future and the socio-economic wellbeing of future generations.” He highlighted challenges facing Asean, including overproduction of long steel products, heavy reliance on imported flat steel, unfair trade practices, and regulatory pressures such as decarbonisation requirements and tariffs like the US Section 232 steel and aluminium duties. At the launch of SIR2035 during the Asean Policymakers Conference on Steel and the 2025 Asean Iron and Steel Forum, Tengku Zafrul shared that Asean-6 steel consumption reached 74 million tonnes in 2023, approaching the pre-pandemic peak of 80 million tonnes, with demand projected to hit 80 million tonnes by 2025. Globally, over 600 million tonnes of excess steelmaking capacity is seeking markets in Asean. For Malaysia, upstream steel capacity could reach 40.8 million tonnes by 2030, while domestic demand stands at only 14.7 million tonnes, reflecting overcapacity, underutilised assets, and weakening competitiveness. As one of the country’s most carbon-intensive sectors, the steel industry faces regulatory and market challenges, making decarbonisation essential. Tengku Zafrul also proposed a regional cooperation framework, including an Asean-wide database on capacity and utilisation, a shared decarbonisation pathway with full monitoring, reporting, and verification (MRV), environmental product declarations (EPD), and harmonised green steel standards. The event was organised in collaboration with the South-East Asian Iron and Steel Institute (Seaisi), with Deputy Minister Liew Chin Tong and Seaisi chairman Datuk Lim Hong Thye also in attendance.

KUALA LUMPUR, DIBIZ Global, a sustainability commodities traceability platform, has partnered with the Malaysian Sustainable Palm Oil (MSPO) to roll out eMSPO, a pilot project offering full end-to-end traceability to support compliance with the European Union Deforestation Regulation (EUDR). DIBIZ co-founder and CEO Unnikrishnan R. Unnithan said the collaboration represents a milestone for MSPO as the world’s first national certification system to adopt blockchain-powered real-time traceability and deforestation metrics. “This initiative ensures all stakeholders, especially smallholders, are part of an EUDR-compliant supply chain. It also reinforces Malaysia’s global leadership in agri-commodities while embracing blockchain technology for EUDR and beyond,” he said. The eMSPO platform will track each delivery order and production step, applying product transformation standards to prevent non-compliant items from entering the supply chain while protecting commercial data. Every transaction will be verified in real-time against deforestation risks through DIBIZ’s GIS partner, EarthDaily, and authenticated by Control Union. DIBIZ said this positions Malaysia’s palm oil industry to meet EUDR requirements well ahead of the December 30, 2025, deadline. The Ministry of Plantation and Commodities recently announced that the EU officially recognised MSPO certification as a credible sustainability standard with advanced digital traceability, affirming Malaysia’s leadership in sustainable palm oil and ensuring over half a million smallholders are part of the agenda.

KUALA LUMPUR, Straits Energy Resources Bhd, through its subsidiary Benua Hijau Sdn Bhd, has set a new entry in the Malaysia Book of Records by planting 12,275 Melaleuca cajuputi (Pokok Gelam) saplings in a single day — the largest tree-planting event of its kind in the country. The effort is part of Benua Hijau’s long-term reforestation programme to restore degraded areas in the Setiu Wetlands State Park, one of Peninsular Malaysia’s largest natural wetlands. The project aims to plant 100,000 Pokok Gelam trees over five years, rehabilitating about 200 acres of forest with this native species. From left: Yayasan DiRaja Sultan Mizan board of trustees member Datuk Dr. Che Ab Rahim Nik, Majlis Pengurusan Taman Negeri Terengganu director Datuk Tengku Mohd Arifin Tengku A. Rahman, The Malaysia Book of Records official representative Megat Faris Hussein Megat Muzaffar Shah, Terengganu State Committee on Tourism, Culture, Environment and Climate Change chairman Datuk Razali Idris, Straits Energy Resources Bhd chairman Datuk’ Seri Tengku Baharuddin Ibni Almarhum Sultan Mahmud and Benua Hijau Sdn Bhd project director Dr. Paul Yap Poh Onn. The record-breaking initiative took place during the Festival Setiu Wetlands 2025, organised by the Terengganu State Parks Management Council with support from Straits Energy and its NYSE American-listed unit, TMD Energy Ltd. The event was designed to raise awareness about the importance of conserving wetlands. Close to 500 volunteers — including local residents, students, NGOs and government agencies — joined the planting activities, covering 20 acres of degraded wetland, an area roughly the size of 11 football fields. Since the launch of the Gelam Research Centre & Nursery in October 2024, more than 7,800 trees have been planted with help from students and community groups. “With today’s achievement of 12,275 saplings planted, Benua Hijau is on track to meet its goal of 20,000 Gelam trees annually,” said chairman Datuk Seri Tengku Baharuddin Ibni Sultan Mahmud Al-Muktafi Billah Shah. He added that the milestone marks an important step forward in the company’s large-scale reforestation vision, demonstrating how collaboration between government agencies, corporations and communities can deliver lasting environmental and social benefits.

HANOI, In recent years, more companies in Vietnam have ventured into the green economy, producing sustainable goods such as biodegradable packaging, organic foods, and eco-friendly fashion. While growing environmental awareness has boosted consumer interest, green businesses face persistent challenges — especially high production costs — which make it difficult to compete on price or scale up in the domestic market. Inside a factory of Faslink, a firm committed to sustainable fashion for over 15 years. Experts say that despite positive momentum, eco-friendly products often remain significantly more expensive than conventional alternatives, leaving many Vietnamese consumers unwilling or unable to make the switch. One example is the Song Hong agricultural cooperative in Hanoi, which produces vegetable-based drinking straws. Despite their environmental benefits and health-friendly design, most of these products are exported to developed markets including Germany, the UK, Japan, and South Korea, as local demand is limited by price sensitivity. Vietnam consumes an estimated 5.3 billion plastic straws annually — about 50 times its population. Even if only 1–2% are improperly disposed of, the environmental impact is severe. Yet, eco-friendly options remain beyond the reach of most domestic consumers. The challenge extends beyond straws. Fuwa Biotech, a Thanh Hoa-based company producing enzyme-based dishwashing liquid from pineapple peels, also struggles with affordability. A 3.8-litre bottle of its chemical-free product retails for VNĐ335,000 (US$13) — two to three times higher than standard alternatives. “High prices are the biggest barrier to reaching more customers,” said Vo Van Luat of Fuwa Biotech, who stressed the need for more forums and awareness campaigns to encourage sustainable consumption. In the fashion industry, long-established players such as HCM City’s Faslink face similar struggles. Deputy general director Nguyen Bech Dien noted that while the company has pioneered fabrics made from recycled and natural fibres, such as pineapple leaves, the high cost of research and production keeps prices elevated. “Consumers remain hesitant to pay more for eco-friendly fabrics when conventional options like polyester or cotton are much cheaper,” she said. A Deloitte Vietnam survey cited by sustainability director Pham Minh Huong found that while up to 50% of consumers express interest in green products, fewer than 30% are willing to pay a premium. “This highlights the gap between awareness and actual behaviour,” Huong said. Industry players argue that lowering production costs is key to making green goods more accessible. But the hurdles are considerable: substantial upfront investments, strict environmental standards, and the need for clean raw materials make scaling up risky and expensive. National Assembly vice chairman Ta Dinh Thi echoed these concerns, noting that many companies are reluctant to expand beyond small-scale experiments because of doubts over profitability and competitive pressure, despite existing government support. Meanwhile, Faslink’s Dien highlighted the difficulty of commercialising new recycled materials. Promising ideas — such as fabrics from banana stems or composting mushrooms — often stall at the lab stage due to technology and supply chain gaps. Recycling plastics remains particularly costly. At Duy Tan Recycling, recycled plastic costs 20–30% more than virgin plastic, driven by expensive collection, sorting, and processing. “Encouraging waste segregation at source could reduce costs and help lower prices,” said the company’s sustainable development head, Le Viet Dong Hieu. Experts agree that innovation and affordable technology will be critical to driving down costs. But small and medium-sized enterprises — which form the backbone of Vietnam’s green sector — face difficulties accessing financial support and resources. Many are now calling for targeted incentives, funding schemes, and public education campaigns to help them transition towards sustainable production at scale.

KUALA LUMPUR, Bank Islam Malaysia Bhd has rolled out financial assistance measures to support micro, small and medium enterprises (MSMEs) and individual customers impacted by floods across the country. In a statement, the bank said it is offering a disaster relief financing facility for businesses located in districts identified by the National Disaster Management Agency (NADMA) as flood disaster areas. “Through this facility, eligible MSMEs can secure financing to repair or replace damaged business assets, including plants, machinery, and to meet essential working capital needs. “In addition, existing MSME customers in NADMA-designated flood areas may apply for a moratorium of up to six months, covering all credit facilities such as term financing, revolving credit, cash lines, and trade facilities,” it said. For individual customers, Bank Islam has introduced the Prihatin Programme for Flood, which allows house, personal, and vehicle financing-i customers affected by floods to defer monthly instalments for up to six months, subject to applicable terms. The bank is also offering free replacements for damaged or lost credit cards-i, debit cards-i, and cheque books. Bank Islam group chief operating officer and group chief sustainability officer Mohamed Iran Moriff Mohd Shariff said the bank is committed to easing the burden of affected customers. “Recognising the challenges faced by our customers, we are implementing proactive measures with simplified documentation and approval processes,” he said. Applications for assistance can be submitted at any operating Bank Islam branch within three months of the incident.