1. I am very pleased to have this opportunity to address such a diverse and esteemed gathering of business leaders as Bursa Malaysia launches its inaugural Business Sustainability Programme. This is a key milestone in our nation’s growth, and should be a point of pride for all Malaysians. Ensuring the sustainability of Malaysian business is not only important to Corporate Malaysia, but is also an issue close to my own heart. Let me explain why.
2. As many of you are aware, I unveiled the comprehensive Economic Transformation Programme, or ETP, earlier this year as a roadmap to achieving Vision 2020 and becoming a high-income nation based on inclusiveness. The ETP encompasses Vision 2020’s original social and economic aspirations – that is, achieving a better quality of life for the rakyat and fostering economic growth. Yet the ETP goes one step further by making sustainability a core underlying principle, thereby ensuring we can achieve high growth today without compromising the ability of future generations to meet their own needs.
3. The 26th President of the United States, Theodore Roosevelt, once said, “The nation behaves well if it treats the natural resources as assets, which it must turn over to the next generation, increased and not impaired in value”. I couldn’t agree more with this statement, and I believe that a nation’s competiveness is not only measured by its economic growth but also by how effectively it addresses global socioeconomic and environmental challenges.
Ladies and gentlemen,
4. As a nation, Malaysia has made great progress. We have laid out a clear vision for where we want to be by the time the next generation assumes the mantle of leadership, and forward-looking plans that specify how to get there. The GTP, ETP and the 10th Malaysia Plan, represent our hopes for the nation while strengthening the building blocks that mark each step along the path of our development.
5. As with most developing countries and emerging markets, our past focus was always on economic growth. While this still remains an important consideration, the Government also recognises the importance of ensuring that Malaysia’s fundamentals – our economy, capital markets and social fabric – are fortified to protect our future interests as we reach the next level of development.
6. If we are to be a successful, high-performance nation tomorrow, we must build a sustainable framework for Malaysia today. We need to support innovation and continue adopting new ways of doing things in order to achieve our growth targets. Over the last few years, sustainability considerations have prompted companies to combine their financial objectives and decision making processes with broader environmental and community concerns. This new “triple bottom line” cuts across profit, people, and planet, and is all the more critical because sustainability is a global issue with a resounding impact on every country.
7. But let me be clear – sustainability is about doing well by doing good. It is not about spending money on philanthropic acts, but rather, about integrating sustainability into corporate missions, strategies, and execution of business plans. These practices build organisational strengths today and will endure tomorrow. This is why sustainability should be a core part of our business ethos.
Ladies and gentlemen,
8. In his speech, Tun Dzaiddin mentioned that Malaysia ranks third out of 10 countries in the Asian Sustainability Rating 2010 by CSR Asia. This recognition demonstrates that many Malaysian companies do understand the importance of sound governance and responsible business practices. But we should not stop here. Such recognition should be a driving force for other companies to improve their sustainability practices, which in turn will help propel Malaysia as a preferred destination for high quality business and investment guided by Environmental, Social and Governance, or ESG, considerations.
9. Simply put, this is smart business. Good sustainability practices equip companies to better meet challenges and attract discerning investors. More often than not, companies that integrate sustainability issues into their business strategy are in a better position to proactively identify and manage risk – financial, human, and environmental – and ensure business continuity even in the most troubling of times.
Ladies and gentlemen,
10. Investment metrics are increasingly focusing on quality over quantity. As I mentioned earlier, investors are being drawn to companies that integrate environmental and societal concerns into their strategic planning, and conduct business ethically and responsibly. Socially responsible investment incorporates additional ESG factors for consideration alongside traditional financial indicators in identifying good investment opportunities. These factors increasingly guide investment decisions in developed markets, and include global issues such as climate change, local issues such as community involvement, and core business principles such as risk management and good governance.
11. Furthermore, studies have shown that there is a positive correlation between companies’ sustainability practices and their share price performance. Many international responsibility indices have emerged, such as the Dow Jones Sustainability Index and FTSE4Good, as well as other rankings like the Fortune Most Admired Companies list, among others. These indices profile the world’s most socially responsible companies and attract global socially responsible investment (SRI) funds. At the end of last year, estimates of the European SRI market value were placed at US$7 trillion. This figure is expected to increase to US$26.5 trillion by 2015.
12. Large institutional investors can also actively influence companies to focus on sustainability. I believe that over time, this global development will translate into greater demand for SRI funds within Malaysia. Much work needs to be done, but I hope that these initial steps will further encourage companies to consider the triple bottom line that I described earlier.
13. Sustainability considerations must also be reflected in the government’s broader policymaking agenda. At home, we recognise that we cannot achieve high-income status without intense human capital development. Last month, I announced that the government will establish the Talent Corporation soon. This will help us proactively identify, recruit, and retain an expert workforce to increase Malaysia’s productivity and enhance our competitiveness. On a global level, at the UN Climate Change Conference last year, we pledged to develop a low-carbon economy by reducing Malaysia’s carbon dioxide emissions to 40 per cent by 2020.
14. The government is also committed to developing the right incentives to encourage sustainable development in the private sector. For example, in the 2010 budget we included tax incentives for companies that use Green Building Index, or GBI, certified buildings. The GBI is a comprehensive rating system for the environmental design and performance of Malaysian buildings that takes unique factors into account such as Malaysia’s tropical climate and environment.
15. We have also implemented numerous policies to encourage research and development, funding, and proliferation of sustainability technologies. The National Green Technology Policy, for example, is a RM1.5 billion funding scheme to promote the use of green technology. Malaysian companies that produce or use green technology are eligible for a 2 per cent interest rate discount that will be borne by the government. The government will also help to mitigate risk by guaranteeing 60 per cent of financing via Credit Guarantee Corporation Malaysia Berhad.
16. We are also developing ways to share best practices and recognise leaders in sustainability. The Prime Minister’s CSR Awards, the Malaysia Plans, the Capital Market Master Plan and the Silver Book for GLCs all reflect the broad range of sustainability considerations that the Government wishes to see realised. Efforts by industry and professional associations complement regulators’ efforts to develop benchmarks and best practices in this area. By raising both the public’s awareness and their expectations, we can collectively urge companies to surpass minimum regulatory compliance and exert true leadership in sustainability. Listed companies in particular must not fall behind in terms of corporate citizenship, as sustainability has both short term and long term implications for business success.
Ladies and gentlemen,
17. Powering Business Sustainability is a compelling theme. And as the frontline regulator, a market operator and a listed company, Bursa Malaysia is in a unique position to address sustainability challenges from multiple perspectives. Through its combined role, Bursa Malaysia has the ability to influence the way its listed companies view, adopt and integrate sustainability practices into their own business operations.
18. The tools that Bursa Malaysia is introducing today – the Guide, the Knowledge Portal, and the Matching Facility – are powerful instruments to help galvanise Malaysian companies to action. Looking at this comprehensive programme, I commend the initiative taken by Bursa Malaysia to raise the profile of sustainability practices in Malaysia. I hope that all Malaysian companies will make sustainability practices an integral part of your business functions.
19. I recognise that the ever-changing demands of the marketplace can make it difficult to keep pace with new sustainable practices. Yet while no individual step should be deemed too small, comprehensive reforms from all sectors to increase and enhance sustainability are urgently needed. While philanthropic efforts make important contributions to the communities where we live and work, it is important to remember that true sustainability is about so much more.
20. Sustainable development will have a concrete impact on national economic growth, industrial innovation, and individual business’ bottom lines. There is a lot to learn, but we are committed to providing the tools and resources to help with this process. This is why I am pleased with Bursa Malaysia’s efforts in introducing a Business Sustainability Programme. It really will make a difference.
21. Malaysia began our sustainability journey long ago. Now it’s time for Corporate Malaysia to help us move faster by adopting an integrated and inclusive approach to business that embraces a group of stakeholders broader than just shareholders, and makes our vision of a high-income economy a reality. Let us work together to secure our future.
22. Ladies and gentlemen, it now gives me great pleasure to officially launch the Business Sustainability Programme.
Wabillahitaufiq Walhidayah Wassalamualaikum Warahmatullahi Wabarakatuh