The world faces a range of risk and sustainability challenges that are interconnected. These interconnected challenges affect the economy, the environment, businesses, and society. Malaysia faces the same set of challenges as well.
Listed below are eight (8) key sustainability risks that have been identified:
- Climate Change and Extreme Weather Events
- Deforestation and Biodiversity Loss
- Waste Management and Plastic Pollution
- Energy Transition and Carbon Emissions
- Sustainable Agriculture (especially palm oil)
- Water Security
- ESG and Regulatory Compliance
- Sustainable Industrial and Infrastructure Development
There are many more challenges or risks than the eight risks listed above. However, these are among the more pressing issues that our country is facing today. All these issues are manmade issues. We should not and cannot hide behind the ‘Act of God’ escape clause, especially when speaking about the devastation that each of these factors acts as an impedement towards the sustainable development of Malaysia.
Addressing and resolving these issues require a set of firm and committed actions, which include stronger environmental policies, investment in renewable energy, responsible resource management, improved waste management systems, and greater collaboration between government, businesses, researchers, and communities.
Let us now delve deeper into each of these eight key sustainability risks.
Climate Change and Extreme Weather Events
Today, there are more and more young people not only understanding, but in fact studying the science of Climate Change and its effects, leading to a higher occurrence of Extreme Weather Events. For Malaysian who are in their 50s and above, this group has a firsthand experience regarding the rising temperatures and changing rainfall patterns in Malaysia.
The immediate threats are in terms of food security and public health. Malaysia has experienced more extreme weather events, such as frequent floods, heatwaves, landslides, and droughts over the past few decades. These extreme events continue to damage existing infrastructure, agriculture, and endanger communities. On the one hand, this can be as complicated as to lead to the disruption of supply chain, and on the other hand, disrupt the movement of children to attend school.
Deforestation and Biodiversity Loss
Malaysia maintains its aspiration to retain forest cover for 50% of our land mass, initially set in 1992 by our then Prime Minister Mahathir Mohamed at the Rio Earth Summit in Rio de Janeiro, Brazil. In today’s modern Malaysia, our reality is neither fantastic nor is it bleak. We are still managing to maintain the minimum 50% forest cover that is our aspiration, but development has taken its toll on the environment.
Wildlife habitats continue to be reduced due to forest clearing for agriculture, urban development, and infrastructure use. There are many endangered species in Malaysia. The species that remain under tremendous threat include the Malayan tiger and orang utan.
Waste Management and Plastic Pollution
The Malaysian Solid Waste and Public Cleansing Management Act 2007 or simply known as Act 672 mandates the segregation of business and household waste at source. This Act only affects the states of Peninsula Malaysia and the Federal Territories. Unfortunately, the Act has not been fully implemented even till today. Even Penang and Selangor are in the midst of easing into implementation of the Act possibly this year.
Malaysia still relies heavily on landfills, which are expensive to maintain and increase waste management costs. Organic matter in non-sanitary landfills is a source of methane emissions. Leachate, which is a contaminated liquid that forms when water or rain seeps through solid waste, contributes to groundwater pollution.
The other major environmental concerns that remain are plastic waste and illegal dumping. There are studies that show an increase in microplastics in water and seafood. Illegal dumping of waste continues to be a thorn in the side of enforcement agencies like the Department of Environment and Local Authorities.
Energy Transition and Carbon Emissions
Malaysia introduced the National Energy Transition Roadmap (NETR) in 2023 as a national strategic plan to reduce its reliance on fossil fuels. Although fossil fuels (particularly coal and gas) still account for a large share of electricity generation, Malaysia is increasing its renewable energy investments, particularly in solar panel farms and hydroelectricity generation, which are supported special tariffs regulated by the Renewable Energy Act 2011 (Act 725).
Businesses face growing pressure to reduce carbon emissions and improve energy efficiency. The mandatory reporting requirements by Bursa Malaysia, the implementation of both the Energy Efficiency and Conservation Act (EECA) 2024 (Act 861) and ISO 50001 all act in unison to address these specific issues.
Sustainable palm oil production
Palm oil is a major economic sector but faces challenges related to deforestation, greenhouse gas emissions, and international sustainability standards. Palm oil is proven to have the highest oil output per hectare compared to other vegetable oils. Depending on who you listen to, palm oil production is either a saviour or a demon.
More recently, rising diesel costs and supply shortages have also disrupted harvesting in Sabah and Sarawak, affecting production.
Water Security
Water resources face increasing pressure from population growth, pollution, and climate change. Selangor is in danger of reaching water stress. Meanwhile, Penang is seeking to buy water from Perak to reduce its reliance on water from Kedah.
Water supply and agricultural production can both be disrupted by floods and droughts. Our crops are sensitive to an overabundance or lack of water.
ESG and Regulatory Compliance
Public Listed Malaysian companies are facing stricter mandatory ESG (Environmental, Social and Governance) reporting requirements from Bursa Malaysia. This would include supply chain transparency expectations, and climate-related financial risks.
Meanwhile, export-oriented industries are adapting to international regulations such as carbon-related trade measures (EU’s Carbon Border Adjustment Mechanism or CBAM).
Unfortunately, Malaysian companies are faced with an array of frameworks and guidelines to choose from.
Sustainable Industrial and Infrastructure Development
Rapid urbanisation and industrial growth increase pressure on natural resources, energy, and land. The Government should introduce stricter sustainability requirements for new projects that take into consideration these same resource management issues. Industrial activities may cause air, water, and soil pollution if environmental regulations are not properly enforced. We should also consider that the high costs of adopting green technologies can discourage businesses, especially small and medium sized enterprises.
Inadequate public transport and uneven infrastructure development, particularly between urban and rural areas, also create challenges. Malaysia therefore needs greater cooperation between the government and industry.
One of the fastest-growing industries in Malaysia is data centres. On one hand, the data centre industry brings into the country huge investment and large number of jobs. On the downside, it also raises concerns about electricity demand, water consumption, and environmental impacts on local communities. Artificial Intelligence (AI) data centres are expected to increase energy demand manyfold.
Conclusion
As Malaysia celebrates 69 years of Merdeka, we have managed to overcome many obstacles by sticking together as Malaysian. The challenges are not insurmountable if we work as one nation toward a practical and workable solution.
EnvironMentalist
Director, Business Council for Sustainable Development Malaysia Berhad
Anthony Tan Kee Huat
