Green Practices Guideline for Services Sector

1.3.3 IMPACTS OF ESG TOWARDS THE INDUSTRY ESG ESG, an abbreviation for Environmental, Social, and Governance, is a vital element for the services sector in Malaysia to consider integrating in its sustainability information reporting. It is a set of criteria or factors that measures the ethical and sustainability impact of an investment in a company, and it plays a significant role in ensuring long-term success and sustainability. The Ministry of Finance has outlined strategies to empower and enable Small and Medium Enterprises (SMEs) in the services sector to adopt ESG practices. This includes implementing Principles for Good Governance for government-linked investment companies (GLICs) and introducing specific financing measures such as the Low Carbon Transition Facility by Bank Negara, matching grants for NGOs and social enterprises, and allocations to support initiatives like Kasih Suri under EPF and SOCSO. The establishment of the Malaysia Sustainable Development Goals Trust Fund (MySDG Fund) further supports ESG efforts in the services sector. The services sector, which includes industries such as hospitality, consulting, and logistics, faces various challenges related to environmental impacts, resource efficiency, and greenhouse gas emissions. Compliance with ESG principles has become increasingly important for the long-term survival and success of businesses in these industries. It aligns with the expectations of trading partners, capital markets, and financial institutions. At COP26, developed countries pledged USD 100 billion annually to support climate efforts in developing countries, in line with the goals of the Paris Agreement and the United Nations Framework Convention on Climate Change (UNFCCC) until 2025. This climate finance includes local, national, and transnational funding for mitigation and adaptation actions, providing businesses with opportunities to align with existing ESG frameworks and receive financial support. Globally, a growing number of investors prioritise ESG frameworks when making investment decisions. Energy efficiency, waste management, greenhouse gas emissions, water consumption, and the use of biodegradable materials are key concerns for global finance. These aspects fall within the three focal factors of ESG, which evaluate the sustainability and ethical impact of investments. Businesses in the services sector that neglect to address ESG components may face risks in their operations, increased financing costs, and fluctuating share price performance. To address environmental protection, climate change, and sustainable development, companies in the services sector should consider adopting green technologies in their operations and management. By embracing ESG principles, the services sector in Malaysia can enhance its environmental performance, social responsibility, and governance practices. This ensures long-term viability and competitiveness in an increasingly sustainable-focused global landscape. 20 GREEN PRACTICES GUIDELINE FOR SERVICES SECTOR