Khazanah Nasional Berhad in its launch of the sustainability framework will now look at all its key investee companies to deliver sustainable value by integrating environmental, social, and governance considerations into their core business.
The Sustainability Framework introduced is designed to be holistic, captured under the three main pillars of ESG, and focuses on issues that most impact the organisation and its portfolio from a business materiality point of view.
Khazanah Managing Director, Dato’ Amirul Feisal Wan Zahir, said: “To execute a coherent response to sustainability, we will adopt an all-of-Khazanah approach – covering all aspects of how it behaves as a responsible investor, as a sustainable organisation, and as a good corporate citizen.”
“This means that Sustainability is embedded into everything that we do – from how we manage our investments, to how we operate as a firm, to how we support and contribute to the societal development objectives of the nation,” he said.
According to Dato’ Amirul Feisal, as the country’s Sovereign Wealth Fund, it is pivotal for Khazanah to ensure that its actions support and encourage a responsible transition towards a more resilient and inclusive economy.
“To ensure that we hold true to our aspirations, we have developed a set of Guiding Principles to anchor our decision-making in our Sustainability journey. We strive to bring balance in adhering to these principles, allowing flexibility to adapt our Sustainability approach based on the different asset classes and sectors that we invest in. Fundamentally, we aspire for positive and improved outcomes that will not only benefit the economy but society as a whole,” Dato’ Amirul Feisal said.
Addressing over 150 Chairmen, CEOs, and Senior Management of Government-linked Investment Companies and selected Government-linked Companies, Finance Minister, Tengku Datuk Seri Utama Zafrul Tengku Abdul Aziz said that the government has outlined several key priorities in its recently announced Budget 2023 Pre-Budget Statement, including Malaysia’s strategic transition from the current recovery phase to longer-term reforms.
“While these are promising foundations, it cannot be done in isolation. Lasting and sustainable reforms can only be achieved by uniting the entire nation behind a common sustainability vision, with participation from all parties, including the private sector,” he said.
He added that the Ministry of Finance is confident that both public and private sectors will play their respective roles and contribute to the success of Malaysia’s sustainability efforts and goals.
According to him, GLCs contribute to the mainstreaming of ESG by serving as role models, catalysing change within their respective ecosystems, and encouraging the rest of Corporate Malaysia to consider how they behave and how their actions affect the communities and environment in which they operate.
As part of its Framework, Khazanah has identified Sustainable Investing and Enterprise Sustainability as two key action points to help achieve its sustainability targets.
Through Sustainable Investing, Khazanah will embed ESG considerations into its investment decision making and stewardship of all its investee companies. Additionally, through Dana Impak, Khazanah will actively invest in catalytic sectors that will help build national resilience and deliver socio-economic benefits to the nation. This includes themes around building climate resilience, as well as providing decent and dignified work, and social mobility for the rakyat.
Concurrently, via its Enterprise Sustainability approach, Khazanah will embed sustainability into its day-to-day operations through better management of its energy usage, material consumption patterns, as well as travel practices.
Under the Environmental imperative, Khazanah aims to safeguard Malaysia’s natural assets as well as protect the environment for current and future generations. Under the Social imperative, Khazanah aims to improve the socio-economic well-being of all stakeholder groups by taking into consideration how business actions affect their customers, employees, suppliers, contractors, and the surrounding communities. While under the Governance imperative, Khazanah will ensure its actions and policies as stewards of businesses are carried out in a responsible manner.
Within the Environmental pillar, Khazanah has set a target to achieve net zero emissions by 2050 and will be working towards carbon-neutral operations by 2023, actively assessing ways in which it can eliminate its emissions footprint through better work practices – as well as funding initiatives and projects providing a carbon offset.
On the Social front, Khazanah aims to enhance diversity, equality and inclusion policies and programmes. Khazanah will also work towards ensuring 30% of the Boards and senior leadership positions are held by women by 2025.
From a Governance standpoint, Khazanah will enhance Board competencies in the area of sustainability at its portfolio companies by 2024, disclose its voting principles at company general meetings by 2022, and include ESG-linked KPIs for key leadership positions for its portfolio companies by 2023.
