Driving sustainable change

IJM Corp group chief executive office and managing director Liew Hau Seng points out that the conglomerate has experienced positive earnings from being more resource-efficient.

THE corporate world has entered an interesting period of history whereby running businesses responsibly and sustainably has become a new norm.

The climate change crisis coupled with the Covid-19 pandemic’s impact on public health as well as social vulnerabilities has called for countries to transition to low carbon economies and businesses to grow responsibly.

Starting from young, even academicians in universities have started to teach sustainability and educating the youth to achieve sustainability targets in the future.

In addition, companies have also included sustainability to their training curriculum for employees.

Similar to the hype of going digital, companies are under pressure to have strong sustainability programmes because investors, bankers and even research analysts have now included the sustainability metrics in their assessments.

This is why companies are forced to follow suit if they want to access capital at a competitive rate by bankers.

Similarly, investors are only considering to pump money in companies that have linked sustainability in their corporate strategies.

Not only that, politicians have also started to launch programmes that transforms companies to grow socially responsible.

Recently, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz has announced the PLC Transformation Programme (PLCT), that included a key pillar on enhancing public listed companies to be socially responsible and transform into ethical organisations.

Malaysia has also pledged to achieve net zero carbon emission as early as 2050, ahead of Singapore and Indonesia, according to the recently tabled 12th Malaysia Plan.

The country is also in the midst of drafting the National Climate Change Legal Framework, expected to be completed by end of this year.

However, it is worthy to note that PwC’s SDG Challenge 2020 revealed that although 73% of Malaysian companies mentioned the Sustainable Development Goals in their reporting, but only 20% had included these goals in their business strategy.

Andrew Chan, who is PwC’s South-East Asia sustainability and climate change leader explains the slow pace in adopting the sustainable goals in their business strategy is due to the skills gap that exist in the market.

“There is not enough sustainability capability in the market, companies have to take time to learn and invest in the right talent.

“Have a look at LinkedIn sustainability job postings and see how many companies are looking for these talents.

“There is a growing demand for companies looking for people in this new area,” he told StarBizWeek.

Overall, Chan says that incorporating sustainability is about how a company not only delivers value to its shareholders, but also to the relevant stakeholders.

“Would an investor take high financial returns knowing a company is also generating high air pollution that damages the health of the community?” he quips.

But is it expensive to respond to sustainability?

Chan, who leads a team that provides a range of sustainability services, says if a firm does sustainability mainly as a compliance response, it will likely see sustainability being a cost to the business.

“When companies respond to sustainability with the mindset of using it as an approach to enhance financial performance and deliver social or environmental benefits, they typically move into a cycle of continuous improvement and drive innovation. “These companies don’t view sustainability as expensive,” he notes.

One company that has proven just that is IJM Corp Bhd, which has incorporated sustainability across many of its business divisions, as one of its core strategic agendas.

Its group chief executive office and managing director Liew Hau Seng points out that the conglomerate has experienced positive earnings from being more resource-efficient.

“While we have experienced positive earnings outcomes from being more resource-efficient, value from the intangible benefits may, over the long term, be more than the earnings contributions.

“In our experience, the adoption of best practices instils the professional culture, both within the organisation and our supply chain, is necessary to deliver quality products and services, thereby enhancing the business reputation.

“Our measure of performance is based on a wider set of standardised non-financial metrics, not just bottom-line figures,” he says.

It is important to note that about 16 of the group’s completed projects are green building certified.

For its property division, IJM Land Bhd uses building materials made from recycled materials and sustainable sources and utilises renewable energy and rainwater harvesting systems.

Liew says embedding sustainability in its products is vital, as it helps translate into good customer satisfaction ratings as well.

For financial year 2021 ended March 31 (FY21), the group achieved a customer satisfaction score of 75% indicating the willingness of its customers to provide positive word-of-mouth referrals.

“We continue to work with clients to incorporate energy and resource efficient features into our projects by building resilient infrastructures that help mitigate climate change and improve the environment,” notes Liew.

In addition, he says that group’s industry division started utilising modified additives in the manufacturing process of piles, which has led to a reduction in both fuel consumption and a major raw material cement. This has contributed positively to the group’s earnings.

Moving forward, Liew discloses that IJM’s port division would also be replacing conventional bulbs with energy-saving LED lighting within its operations to further conserve energy.

Given that most businesses are facing challenging with the ongoing Covid-19 pandemic, he advises that it is important to drive the sustainability agenda from a value perspective and set clear business outcomes.

Nonetheless, he says the challenge lies in attaining real and lasting positive impacts on society and the environment.

“This would require greater alignment and coordination between different stakeholders,” he says.

Currently, IJM is in the midst of updating its sustainability roadmap for FY22-FY24, mainly focusing on addressing market and stakeholders’ expectations.

Liew explains the roadmap would address “the global agenda to reduce the carbon footprint, climate risks, opportunities, enhancing the green credentials of the group’s products and services as well as adopting a more strategic approach to community investment.”

To a large extent, IJM has incorporated sustainability into the group’s operations that drive its decisions on a daily basis.

For instance, Liew points out sustainability key performance indicators (KPIs) have been established across the group’s business operations and at corporate levels.

“We place high importance on the health and safety of our stakeholders and proactively promote safety, health and well-being at the workplace and the communities we serve, zero fatality and zero accidents targets are key performance indicators included in the incentive packages for all project directors, ensuring healthy lives and promoting well-being for all at all ages.

“We are raising our corporate ambitions for sustainability through our operations, strategic focus, sustainability roadmap and initiatives such as ‘Sustainability Week’ – creating an iterative cycle of strategy, transformation, reporting and communication,” he explains.

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