Malaysia-based suppliers risk RM269b by not going green: Standard Chartered

 

A study by a banking and financial services company showed that Malaysia’s supply chain is risking more than US$65 billion (RM269 billion) if businesses fail to curb their carbon emissions.

Standard Chartered said that if Malaysian suppliers fail to transition alongside their multinational company (MNC) partners, "this could mean a loss in export revenue of US$65.3 billion".

“However, the study also reveals a US$1.6 trillion market opportunity for suppliers who decarbonise in line with their MNC partners’ net-zero plans,” it said in a statement yesterday.

The study entitled “Carbon Dated”, found that 15 percent of MNCs have already begun removing suppliers that endanger their transition plans, while MNCs are expected to exclude 35 percent of their present suppliers in their transition from carbon.

Moreover, the study said that 57 percent of MNCs are willing to replace emerging market suppliers with developed market suppliers to further support their transition.

Malaysia is one of 12 markets included in the study looking at the risks and opportunities for suppliers in emerging markets, alongside Singapore, Nigeria, Hong Kong and South Korea.

It is said that 90 percent of MNCs with Malaysia-based suppliers have set emission reduction targets for their suppliers, seeking a 30 percent reduction by 2025.

However, it was also revealed that suppliers in emerging and fast-moving markets face greater challenges with their net-zero transition, due to insufficient knowledge and inadequate data.

To combat this, some MNCs are offering incentives such as higher investment in new technologies and clean energy infrastructure on behalf of their suppliers, as well as offering preferred supplier status to sustainable suppliers.

Some are even going further to propose grants and loans to invest in data collection and reducing emissions from operations.

“To meet the goals of the Paris Agreement and reduce carbon emissions to net-zero by 2050, collaboration is crucial.

“We can only combat the worst effects of climate change when all of us, be it financial institutions, policymakers, regulators and corporates, work together,” said Standard Chartered Malaysia managing director and chief executive officer Abrar A Anwar. - Mkini