On the cusp of carbon changes
Global carbon dioxide emissions from all sources – including deforestation and land use – will top out at 40.6 billion tonnes, just below the record level in 2019, the first peer-reviewed projections for 2022 showed.
— Source
THESE days, the buzz around carbon is key towards climate change. Carbon dioxide emissions from fossil fuels
– the main driver of climate change – are on track to rise to an all-time high at one per cent in 2022.
This was among the key higlights from scientists during the COP27 United Nations (UN) climate summit in Egypt which is being held currently.
According to figures from AFP, emissions from oil, fuelled by the continuous rebound in the aviation industry, will likely rise more than two per cent compared to last year, while emissions from coal – thought by some to have peaked in 2014 – will hit a new record.
“Global carbon dioxide emissions from all sources – including deforestation and land use – will top out at 40.6 billion tonnes, just below the record level in 2019, the first peer-reviewed projections for 2022 showed.
“Despite the wild cards of pandemic recovery and an energy crisis provoked by the war in Ukraine, the uptick in carbon pollution from burning oil, gas and coal is consistent with underlying trends, the data suggested.”
The new figures show just how dauntingly hard it will be to slash emissions fast enough to meet the Paris goal of capping global warming at 1.5 degrees Celsius above preindustrial levels.
Heating beyond that threshold, scientists warn, risks triggering dangerous tipping points in the climate system.
Barely 1.2 degrees of warming to date has unleashed a crescendo of deadly and costly extreme weather, from heat waves and drought to flooding and tropical storms made more destructive by rising seas.
To achieve the ambitious Paris target, global greenhouse emissions must drop 45 per cent by 2030, and be cut to net zero by mid-century, with any residual emissions compensated by removing CO2 from the atmosphere.
To be on track for a net-zero world, emissions would have to plummet by seven per cent annually over the next eight years.
How far has Malaysia come?
Malaysia’s commitment to becoming a nation with netzero greenhouse gas emissions by 2050 would require RM350 billion to RM400 billion in cumulative investments, mainly in the energy sector, representing 0.8 per cent of the gross domestic product (GDP) every year until 2050.
This shift includes continued investment in public transportation, tax incentives to promote electric vehicles, and the commitment to phase out coal.
This net zero emission commitment is also reinforced by the Malaysia Renewable Energy Roadmap 2022-2035, developed by the Ministry of Energy and Natural Resources.
On a corporate level, Bursa Malaysia plays a key role in driving good environmental, social, and governance (ESG) practices and disclosures across all listed companies in Malaysia.
Among some of its initiatives include the introduction of the FTSE4Good Bursa Malaysia Index as far back as 2014, recognising public listed companies (PLCs) that have improved their ESG practices and disclosures.
The number of constituents in the Index has since grown from 24 to 87, based on the last review in June 2022.
“We also have the FTSE4Good Bursa Malaysia Shariah Index, which comprises 65 shariahcompliant constituents from the FTSE4Good Bursa Malaysia Index,” said Bursa Malaysia chairman Tan Sri Abdul Wahid Omar during his speech at the ‘Invest Malaysia (IMKL)
Series 1: Building Resilience Amidst Volatility’ conference in September.
Following the Sustainability Reporting Framework of 2015, Abdul Wahid saw that PLCs in the country are now disclosing Sustainability Statements and Reports annually – detailing governance structures put in place and the approach to managing material sustainability matters, covering an extensive range of ESG areas.
“The updated Malaysian Code on Corporate Governance 2021 issued by the Securities Commission further provides best practices and guidance to strengthen board oversight, as well as the integration of sustainability considerations into the strategies and operations of companies.
“The case for Malaysian companies to embed ESG factors in their business strategy and operations is clear.
“The global supply chain is now more discerning and will demand sustainable products and reject sources that are unable to comply,” he said.
These new indices add to the existing portfolio in the FBM Index Series suite that the Exchange jointly issues with index partner FTSE Russell. These additions expand the Exchange’s benchmarking offerings in the ESG, low carbon and climate risk index space to cater to evolving investors’ demand.
The FBM100LC Index tracks companies in the FBM Top 100 Index based on their ESG and carbon intensity performance, thus providing an opportunity for investors to reduce their investment portfolio’s carbon footprint.
The index methodology addresses ESG and climate change risks from multiple dimensions based on clear, transparent and targeted objectives. It is constructed using the FTSE Russell Target Exposure methodology, which applies succussive tilts to capture target exposure and climate outcomes.
The index aims to achieve a maximum 30 per cent reduction in Fossil Fuel Reserves Intensity, 30 per cent reduction in Carbon Emissions Intensity, and 20 per cent uplift in ESG Ratings.
It excludes companies involved with controversial product activities such as weapons, thermal coal, extraction and electricity generation, tobacco, nuclear power, gambling, adult entertainment, and companies involved with controversies related to the UN Global Compact principles.
A shariah version of the index is available where further screening is applied on the constituents to only include shariah-compliant companies.