SEC ESG Forum 2025

SEC ESG Forum 2025

by | May 21, 2025 | Social Impact Assessment, Sustainability Reporting

Sabah Energy Corporation Sdn Bhd (SEC) successfully convened its inaugural Environmental, Social, and Governance (ESG) Forum 2025 under the theme ‘From Intention to Impact: Building a Fit-for-Purpose ESG Future’ on the 13th of May at Menara SEC, one of Kota Kinabalu’s latest office landmarks. Datin Dr Vijayalakshmi Samuel of AGV was given the opportunity to be part of a panel session together with Maybank and SEC to discuss the integration of ESG within organisations.

The event brought together over 100 delegates from State agencies, GLCs, financial institutions, and sustainability practitioners, with the aim of fostering collaboration and accelerating ESG adoption across Sabah’s energy sector and beyond.

AGV’s participation and insights were also featured in Borneo News’ coverage of the event, highlighting the company’s ongoing commitment to advancing ESG practices in the region.

 

 

 

What Makes a Sound Sustainability Policy

What Makes a Sound Sustainability Policy

by | Jun 3, 2022 | Sustainability Reporting

WHAT MAKES A SOUND SUSTAINABILITY POLICY

A sustainability policy can be an excellent starting point to embed the sustainability mindset within an organisation, and to more formally demonstrate your company’s commitment to sustainable practices. There are a few key factors to consider when establishing your sustainability policy, to ensure that the policy has focus and provides value.

Key Attribute Sustainability Policy

Firstly, to ensure correct focus, a sustainability policy should address all three non-financial facets of sustainability – Environmental, Social, and Governance (“ESG”). Relatively equivalent focus on each of these three pillars ensures a balanced sustainability policy. While all companies can include support of more general sustainability issues, such as greenhouse gas emissions, fair wages, and transparent reporting practices, specific areas of focus will depend on your company’s unique business operations. Consider including relevant and topical issues for your industry, such as biodiversity protection for those in the palm oil industry, or human rights and labour practices for those in the manufacturing sector.

The Board of Directors sets the tone for sustainability from the top, and they should be proactive and engaged with policy development. The second key element of a strong sustainability policy is official Board endorsement. The Board should also commit, via the policy, to reviewing and managing ESG-related risks and opportunities for the company on a regular basis – not simply as an annual reporting exercise.

Third, consider publishing your sustainability policy publicly, via your corporate website or company social media. While this is not yet a regulatory requirement, it can be an excellent tool to demonstrate your commitment to good ESG practices to your wider stakeholders.

Finally, while it is admirable to make your sustainability policy ambitious, it is also important to keep in mind what your company can realistically achieve. Overcommitment with your sustainability policy is simply setting yourself up for failure. Keep your policy commitments straightforward and achievable.

With these key attributes in mind, your team will be able to establish a comprehensive and focused sustainability policy – the backbone to enacting your company’s ESG ambitions.

 

The Convergence of Islamic Finance and ESG Investing

The Convergence of Islamic Finance and ESG Investing

by | May 27, 2022 | Sustainability Reporting

WHEN ANCIENT MEETS AVANT-GARDE

The Convergence of Islamic Finance and ESG Investing

Misconceptions about the Environmental, Social and Governance (“ESG”) may mislead you to believe that it merely duplicates Islamic Finance.  In truth, both investment approaches are like the proverbial two sides of a coin; inasmuch as they are separate and distinct from each other, they also share similar characteristics of sustainable and responsible investing (“SRI”). Whereas ESG investing primarily considers what is allowed, Islamic Finance diverges from what is prohibited, but both financing modes point to the same goals of stewardship.

ESG encompasses sustainable investments related to environmental and social stewardship, supported by good governance, while Islamic Finance focuses on the stewardship of life itself, in compliance with the Shari’ah law. The Islamic legal system forbids certain money-making schemes such as speculative investments (“gharar”), investing in prohibited (“haram”) activities, such as gambling and selling alcoholic drinks, and pursuing exploitative gains, such as generating interest income from loans (“riba”).

ESG principles direct the investment focus on the sustainability framework referred to as the triple bottom-line, wherein business performance is evaluated not only based on net profit but, more importantly, on the positive and negative impacts on people and planet. In essence, this value creation strategy aligns with the 17 Sustainable Development Goals (“SDGs”), the universal policy agenda which was officially adopted by the 193 member states of the United Nations in September 2015. When viewed from the lens of the SDGs, the convergence of the 1,600-year-old principles of Islamic Finance and the 21st century ESG investing principles becomes much clearer.

ESG

ESG

What is the best way to appreciate the close correlation between ESG and Shari’ah principles against the backdrop of the SDGs? Start by examining the social component of ESG which consists of goals that benefit society, such as poverty and hunger eradication, healthcare, education and decent employment. Next, compare this with the Shari’ah principles of profit and loss sharing. You will find that both principles point to the overarching goal of leaving no one behind in the pursuit of global development.

Similarly, you will also discover that the Islamic Finance rule of asset-based investment actually corresponds to the environmental goal of affordable clean energy (“SDG 7”) and the goal of industry, innovation and infrastructure (“SDG 9”) that is germane to corporate governance. There is no competition between ESG investing and Islamic Finance. Instead, they complement each other as fund-raising mechanisms that companies can utilise to pursue their commitments to contribute to the achievement of the global sustainable development goals.

Sustainability-Linked Loans

Sustainability-Linked Loans

by | May 20, 2022 | Sustainability Reporting

IS THERE A WAY TO “BUILD BACK BETTER”?

Sustainability-Linked Loans

More than just a fleeting buzzword, sustainability has become a management imperative, especially as businesses strive to recover from the ravaging effects of the Covid-19 pandemic. If your business is among those that previously thrived to serve the needs of modern society but have suffered tremendous losses due to state-imposed lockdowns, there is a way for you to “build back better”, provided you walk the path of sustainability. This means that your business strategy, management practices and operations are closely aligned with the any of the 17 Sustainable Development Goals (“SDGs”).

As investors, regulators and stakeholder groups are demanding a sustainable and resilient economic recovery, Sustainability-Linked Loan (“SLL”) is viewed as the better alternative to traditional capital raising approaches. Aimed at stimulating environmentally and socially sustainable economic activity and business growth, an SLL is defined as any type of loan instrument and/or contingent facility that incentivises the borrower’s achievement of ambitious, predetermined sustainability performance objectives[1].

Overview of Sustainability Linked Loan Framework - Corrie MacColl Limited Rubber

Banks and financial institutions that provide SLLs evaluate a borrower’s sustainability performance through measurable Sustainability Performance Targets. SPTs include key performance indicators (“KPIs”), metrics and external ratings to measure the borrower’s sustainability profile. Businesses, such as Public Listed Companies (“PLCs”), that have embedded the Environmental Social and Governance (“ESG”) principles into their business conduct and have reported their progress either through the Sustainability Statement in their Annual Reports or in a stand-alone Sustainability Report are well-positioned to avail of SLLs. A comprehensive Sustainability Statement must contain the essential elements, such as KPIs and ESG ambitions, that lending institutions use to evaluate loan applications.

One PLC that has benefited from an SLL facility is “Ajinomoto (Malaysia) Berhad (“AMB”). In December 2020, the Japanese multinational food additive manufacturer entered into a RM100 million Sustainability-Linked Islamic Financing Agreement with MUFG Bank (Malaysia) Berhad (‘MUFG’). Demonstrating its status as a responsible steward of the environment, AMB has embarked into an environmentally-friendly industrial development with the construction of a manufacturing plant at the Techpark@Enstek in Negeri Sembilan. With the provision of MUFG’s SLL facility to finance its capital expenditures, AMB commits to reducing its greenhouse gas (GHG) emissions by 30% from the financial year ended 31 March 2019 to the financial year ended 31 March 2026.

Source: AMB Annual Report, page 92

Goal 17: Partnerships for the Goals | The Global Goals

The strong collaboration between AMB and MUFG showcases how SDG 17 – Partnership for the Goals – can be leveraged by businesses and financial institutions, using SLL as a principal mechanism, to jointly rebuild economies that were wrecked by the pandemic and at the same time pursue the achievement of the 2030 global sustainability agenda.

  1. As defined by the Loan Market Association, UK ?

 

Developing a Strategic Stakeholder Engagement Plan

Developing a Strategic Stakeholder Engagement Plan

by | May 13, 2022 | Sustainability Reporting

Towards a Common Goal

Developing a Strategic Stakeholder Engagement Plan

“If you want to go fast, travel alone; if you want to go far, travel together,” according to a famous African relationship quote. Business leaders understand that nurturing strong relationships with stakeholders through effective communication is essential for long term success.

Critical to an organisation’s Strategic Plan, a Stakeholder Engagement Plan can bolster collaborations between the business and stakeholders because it uncovers value-added benefits for both parties, such as:

4 steps strategic engagement plan

Who are Your Stakeholders?

Broadly classified into two categories, your stakeholders are those who have an interest in or influence over the organisation.

  • Internal Stakeholders: People who are part of the company such as the Board of Directors, Management and Employees
  • External Stakeholders: Entities who are impacted by all acts and outcomes of the business operations, such as suppliers, government regulators, customers and communities

internal stakeholder vs external stateholder

Managing Stakeholder Engagement Plan

With the availability of online tools, creating and managing a two-way communication mechanism with various stakeholder groups have become simpler and more efficient, especially when you follow a logical process. For businesses who have embarked into a sustainability journey, here’s what has worked so far:

Step 1: Identification of Stakeholder Group

The first step to stakeholder management is to identify and establish a stakeholder list. The main point is to be as comprehensive as possible so as not to overlook any important stakeholders. Upon completion, the list can be divided into different stakeholder groups for ease of analysis.

Step 2: Stakeholder Analysis and Mapping

The stakeholder groups can be visualised on the matrix below based on:

  • Their level of influence over the organisation
  • Their level of interest for the organisation

stakeholder interest

Step 3: Clarity of Purpose

To be effective, your Stakeholders Engagement Plan must include the coherent purpose of addressing the concerns and expectations of your stakeholders depending on the following elements:

  • Business Sector
  • Resource Allocation
  • Stakeholder Engagement Roles

 

Step 4: Building your engagement strategy

From the stakeholder analysis and engagement purpose, you can formulate a strategy that serves as a blueprint for when and how to communicate with your stakeholders. Your goal is to transmit, with maximum efficacy, relevant information in a transparent manner at the most appropriate time.

The figure below illustrates the prioritisation of communication methods based on the importance of stakeholders:

communication mode based on stakeholders

As an essential prerequisite in Sustainability Reporting, undertaking a Stakeholder Engagement exercise provides a clear path towards managing stakeholder concerns in an appropriate manner. It also demonstrates your organisation’s commitment to be consistently transparent and accountable to your stakeholders as you work together in the pursuit of common goals.

 

Materiality Assessment for Businesses

Materiality Assessment for Businesses

by | Apr 27, 2022 | Sustainability Reporting

Materiality Assessment for Businesses

Sustainability is a prominent topic of discussion in today’s market as more and more people become invested in how businesses conduct themselves sustainably. It is, therefore, important for companies to showcase their journey toward becoming a more sustainable businesses. However, sustainability is an all-encompassing subject matter that entails difficulty in terms of managing and measuring a business entity’s contributory efforts in achieving the sustainability agenda.

Sustainability covers various issues that stem from three main pillars known as environmental, social, and governance (ESG). The figure below illustrates this, with various examples that fall under each ESG pillar.

To better navigate sustainability, businesses can narrow down the ESG concerns to specific subjects that they deem material to their operations and are also important to their stakeholders. Known as the material sustainability matters or material matters, these specific topics can vary from simple topics such as electricity and water consumption to more serious concerns such as climate change and legal compliance.

From these material matters, businesses can then conduct the materiality assessment to produce a materiality matrix. The materiality assessment and the matrix enable companies to prioritise their material matters according to the degree of importance. This is done by ranking each material matter based on their relative significance to the company’s business operations. The materiality assessment also considers the opinions of the stakeholders, such as investors, shareholders, customers, regulators, suppliers, and more importantly, their employees. The figure below shows the steps involved in a materiality assessment.

Assessment

The materiality assessment exercise reveals useful and actionable insights into the ESG priorities of both the business and its stakeholder. After ranking each material matter according to its importance to the business and to the stakeholders, the materiality matrix, as illustrated below, is then produced, showing overall rankings of each material matter.

The benefits of an effective materiality assessment can be far reaching as it provides businesses with the solid foundation for a continuing engagement with their stakeholders with whom they share the vision for a sustainable future.