The Ministry of Investment, Trade & Industry (MITI) in Malaysia has on Monday launched the National Industry Environmental, Social and Governance (ESG) Framework (i-ESG Framework) to prepare the nation’s manufacturing sector on embracing ESG principles, and for tapping into a $12-trillion global market on ESG-focused opportunities.

MITI said in a statement that the i-ESG Framework is a key enabler for the Push for Net Zero mission, one of the four missions of Malaysia’s recently launched New Industrial Master Plan 2030’s (NIMP 2030).

According to the statement, the i-ESG’s overarching objective is to accelerate transition towards sustainable practices among manufacturing companies.

It consists of four pillars – standards, financing, capacity building and market mechanism – as well as 17 strategies, 50 deliverables and six key enablers, aimed at providing invaluable
guidance and driving ‘Just Transition’ towards ESG-compliance for the manufacturing sector, especially for micro, small, and medium enterprises (MSMEs).

“While the New Industrial Master Plan 2030 sets out the ‘what’ on ESG, this i-ESG Framework presents the ‘how’, serving as a roadmap for businesses to integrate ESG considerations into their operations, and a tool for regulators to ensure compliance and accountability,

“The i-ESG Framework Phase 1.0 (2024–2026) prepares the groundwork and fosters the development of a robust ecosystem to help companies embark on their ESG journey,” the Minister of Investment, Trade & Industry Zafrul Aziz said.

More importantly, he said the framework canters around the principle of ‘Just Transition’ because the businesses, particularly the MSMEs, cannot be held immediately accountable to standards that companies in developed markets have had a head start on for at least a decade or longer.

“This also reflects the MADANI Economy’s commitment to inclusivity, ensuring that no one is left behind, particularly in the pursuit of ESG objectives,” he added.

According to the statement, the i-ESG Framework Phase 1.0 comes with an ESG Readiness Assessment (i-ESGReady) to assist companies in understanding and evaluating their current ESG adoption level, and the i-ESG Starter Kit (i-ESGStart), a clear and user-friendly, step-by-step guide with practical examples, as well as calculation methods and templates to facilitate their sustainability reporting.

In Phase 1.0, MITI will also conduct clinic sessions to empower and guide a total of 50 companies on producing their first sustainability report.

The first clinic will be held at end-October 2023 and interested companies may contact their respective business associations or chambers.

With the i-ESGReady and i-ESGStart, companies that have no sustainability reports at all should be able to produce their report within a year.

This will eventually ensure their readiness to meet the more rigorous demands of Phase 2.0 “Accelerate ESG” (2027 – 2030).

“The phased, progressive approach represents the ‘Just Transition’ that Malaysian companies and MSMEs need to fulfil the growing demand for sustainable products, and the requirements for ESG reporting in export markets,

“Through the i-ESG Framework, we also have an opportunity to get our ESG target outcomes right via our manufacturing sector. For the sake of our children and Planet Earth, let us get this right the first time, as we may not have the luxury of considering Plan B, because there is no Planet B,” continued Zafrul.

According to the statement, MITI has also begun its “KenalESG” outreach program in Kuala Lumpur (200 companies), Penang (190 companies), and Johor (130 companies) to raise ESG awareness and introduce the i-ESG Framework to industries.

The program will also be conducted in Sarawak, Kelantan, Terengganu, and Pahang by end-2023, while other states will be covered by the first quarter of 2024.

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