Are financial sectors excluded from the climate change conversation in Malaysia?

Are financial sectors excluded from the climate change conversation in Malaysia?

For the first time ever, Kumpulan Wang Persaraan (Diperbadankan) (KWAP), also known as the Retirement Fund (Incorporated), hosted the KWAP Inspire: Environmental Conference 2018. It was a two days conference, held on 17th and 18th July 2018 at the Grand Hyatt, Kuala Lumpur.

The conference intends to connect the business world, government and environmental activists together to achieve environmental-friendly practices in business. Partnered with WWF as key knowledge advisor, the conference hopes to support the sustainable development agenda to ensure a better environment for future generations.

Impressive line up of speakers were the main attraction for corporates, industry players and NGOs alike to attend the conference. The breadth of topics covered between both days were also eye-catchers, with presentations and conversations revolving around climate finance, stranded assets, fossil fuel, Paris Agreement, ESG, food security and climate risks.

Malaysian Youth Delegations representatives at the KWAP Inspire Environmental Conference 2018 

Among the prominent speakers include representatives from PRI, InfraCo Asia, Standard Chartered Berhad, Amanie Group, United Nations Environment Programme, Khazanah Nasional Berhad, AXA Investment Managers, Sime Darby Plantations, McDonalds, Global Environment Centre, Malaysian Nature Society, PACOS Trust and Bursa Malaysia.

I participated in the conference on behalf of the Malaysian Youth Delegation, along with Syahirah and Aaliyah. Coming from a youth NGO that focuses on climate change policy and education, we were very eager to attend the conference and learn on the private sector’s perspective on climate change, in particularly related to climate finance. I must admit, I have very little knowledge on climate finance as it is not an area which I am particularly keen on, albeit equally important nevertheless. Attending this conference is definitely me stepping out of my comfort zone, to learn more on a topic that was very alien to me.

Looking Beyond Fossil Fuel

with Robert Swan, One of the world’s greatest explorers.

Transitioning to a low-carbon future paves a path towards opportunities in the renewable energy sector, but at the same time, leave carbon-intensive energy assets stranded. Not only that, the value of real estate, agriculture and infrastructure will be affected. Thus, it is important for fossil fuel companies to diversify its portfolio.

However, although the Paris Agreement put forward an increase in ambition for targets, many firms and investors are still unsure of the mechanism of how the emissions reductions will happen, and how much assets will be stranded in the nearby future.

Many asset owners are reanalysing environmental and safety issues in regards to investment strategies, making explicit references to Environmental, Social, Governance (ESG) in development and execution of their investment strategies. In KWAP’s effort to promote ESG values and standards, it had set aside RM800mil to be invested in international initiatives through fund managers locally and internationally. It aims to grow its ESG portfolio to 70% from 50%-60% in order to strengthen it capabilities in responsible investments.

Addressing the Elephant in the Room

Satya Tripathi, Senior Adviser for 2030 Agenda from Sustainable Development, United Nations Environment Programme, was one of the speakers in the “Innovative Approaches to Green Finance” session. He touched on the Emission Gap Report and stated that we are unable to keep global temperature rise well below 2C, preferably 1.5C, without private finance. We have to address the elephant in the room – and the elephant in the room when it comes to combating climate change is, the private sector. The question is, how are private sectors, as key players, been neglecting their contribution towards the health of the environment?

Feeling Left Out of the Conversation

Not me.

I had the opportunity to have a conversation with the CEO of KWAP, Datuk Wan Kamaruzaman Wan Ahmad. Datuk Wan has great vision for KWAP upholding sustainability, reiterating KWAP’s commitment as a responsible investor. KWAP became a signatory of the United Nations-supported Principles for Sustainable Investment (PRI) in February 2018, making its mark as the first pension fund in Malaysia to demonstrate commitment towards responsible investing.

There’s a reason why the KWAP Inspire Environmental Conference 2018 is one of its kind in Malaysia. Datuk Wan expressed his frustration that financial sectors are often excluded in conversations when it comes to climate change, particularly in Malaysia. The government and NGOs know their roles in addressing climate change, but the private sector and financial sector still need to catch up. So, how do we improve the state of communication in between sectors and bridge the gap?

Providing Inclusive Platform

with CEO of KWAP, Datuk Wan Kamaruzaman Wan Ahmad.

Did I mention that the conference costs RM1,880 per person to attend?

KWAP Inspire Environmental Conference 2018 brought big sponsors from the asset management sector, including Affin Hwang Capital, Aiiman, Amundi, BNP Paribas, CIMB Principal, Glennmont Partners, Kenanga, Nikko Am and Serba Dinamik, among others. It also brought big names in the environmental industry such as Robert Swan, One of the world’s greatest explorers, and Nadya Hutagalung, Eco-Activist and TV Personality. The conference was priced at such as it was meant to attract corporate attendees – and the content of the conference reflected just that.

The price of the conference raised a debate on whether the conference was being “inclusive”, or rather it is “just another fancy corporate conference”. The Malaysian Youth Delegation is very grateful to be invited to attend the conference as I believe that we learned a lot on the role of financial institutions in addressing climate change, and the knowledge that we have obtained will definitely be beneficial as we know understand better.

However, the platform limits opportunities for students, NGOs, and interested individuals who are keen on the topic discussed but constrained due to financial capabilities.

Perhaps the first step for the financial sectors to be included in the climate change conversation in Malaysia, is to be inclusive.

Written by Jasmin

The Phase Out of Fossil Fuel Subsidies and the Paris Climate Deal

The Phase Out of Fossil Fuel Subsidies and the Paris Climate Deal

Start funding climate action and stop funding climate chaos!

While working hard on Paris agreement, there are massive struggles on resolving Fossil Fuel Subsidies. According to Shelagh Whitley, a research fellow of Overseas Development Institute (ODI) who works on private climate finance state that G20 countries current fossil fuel subsidies (USD 452 billion) are 4 times more than global subsidies for renewable energy (USD 121 billion).

Based on the recent report “Empty Promises – G20 Subsidies to Oil, Gas and Coal Production”, Russia, US and UK have contributed high national fossil fuel subsidies. While Japan, China and Korea have large contribution in Public Finance. Saudi, Russia and Brazil’s contribution via State-Owned Enterprise sum up to USD 135.9 million per year. In general, state-owned Fossil Fuels (FF) subsidy is the highest, USD 286 billion, where 70% of FF subsidies are government owned which may, or may not be listed on the stock exchange.

01As quoted by Christiana Figueres ”Fossil Fuel subsidies is negative support of climate finance” Despite the pledges made by developed countries to scale up new and additional climate finance, many countries are failing to meet their commitment. As based on the OCI report, over USD 78 billion was spent by developed countries to support fossil fuel production in 2013 and 2014.

On the other hand, each year, G20 countries contributed FF subsidizes of USD 77 billion. Notably, these figures triumphs the current Green Climate Fund accumulation of USD 10.2 billion and developing countries receive just USD 4 billion to USD 5 billion to adapt to impacts of climate change. Many developed countries are failing to meet their commitment and much of the climate finance is not new and sadly, there is little clarity of how these money are mobilized for mitigation and adaptation.

But, this can change. There are some key recommendations for financing future climate action. For instance, more actions should be done at the national level. Government need to honour their pledges to phase out FF subsidies especially via public finance institutions. This includes the provision of grants, equity, loans, guarantees and insurance by majority government owned financial institutions for domestic and international fossil fuel production.Hence, there is the importance of finalizing the Paris agreement as well in achieving low emission and climate-resilient societies and economies development. In the latest Draft Agreement, Article 6, Paragraph 1 & 10 show clear language on reducing financial support for high emission investments.

In conclusion, “we need to ensure this commitment stays building on and strengthening previous commitments made through sustainable development goals (SDGs) and G20s commitments.” – Maeve McLynn, Climate and Development Policy Coordinator, CAN Europe

Written by: Jolene Journe T.

Edited by: Merryn