RISING temperatures could have significant implications for Malaysian businesses, affecting everything from labour productivity to daily operations.
The World Bank’s Malaysia Country Climate and Development Report (2026)warns that rising temperatures are eroding labour productivity, with Malaysian urban areas potentially facing more than 100 days of extreme heat annually by mid-century, placing further pressure on workers and businesses.
As climate risks become more pressing, Malaysian businesses need to consider not only how to reduce their contribution to climate change, but also how changing conditions could affect their operations, workers and supply chains.
Speaking at the recent Asia ESG Summit on “Climate Resilience & Adaptation: Hardening Assets Against Extreme Weather Risk”, Assoc Prof Dr Chen Jit Ern, head of the Jeffrey Sachs Centre on Sustainable Development at Sunway University, said while efforts to reduce carbon emissions remained important, businesses also needed to prepare for a certain level of climate change.
Despite climate action being taken globally, current efforts were still not sufficient to keep warming within desired levels, he said. This meant businesses needed to consider how their assets and business models could operate in a warmer environment.
Chen said climate resilience goes beyond protecting physical infrastructure, as businesses also need to consider the impact on their workers, customers and operations.
“A lot of the hardening and resilience actually doesn’t necessarily come from having better infrastructure. It’s also coming from having better mindsets of the people who are working for you, as well as the customers that you may have for your various business models,” he said.
Preparing for rising heat
The increased demand for air-conditioning maintenance during periods of hotter weather is an early indication of how people and businesses were already responding to heat.
However, relying on more air-conditioning alone would not necessarily be an effective long-term solution, Chen pointed out.
Higher cooling demand also means greater electricity consumption, which could increase emissions and work against efforts to mitigate climate change.
Ideally, businesses should instead consider how buildings themselves could be better adapted to higher temperatures, including through better insulation, materials, shading and design to reduce the amount of cooling required.
He cited the Parliament building in Kuala Lumpur as an example of how architectural design can help reduce exposure to sunlight.
“More than that, the idea here is that you have to make decisions based on how much cooling you need.”
The challenge then becomes different for economic activities that take place outdoors. Construction workers and farmers, for example, cannot rely on air-conditioning to deal with extreme heat.
Chen said some construction sites were already responding through adhoc strategies such as moving workers to indoor tasks when conditions became too dire.
Perhaps businesses may also have to consider changes to working hours, including carrying out some work at night, an example done by companies in the Middle East.
But such changes could create other considerations, he reminded.
For example, night shifts require adequate lighting and could bring additional safety risks, on top of costs. Workers may therefore require different training, while businesses would have to determine which activities could be carried out safely at night.
“All of these things will end up being part of your mitigating factors as you adapt to climate change,” he said.
Looking beyond physical assets
Climate risks may also affect the supply chain of a business.
Chen used rice production as an example of how a physical climate impact in one part of a supply chain could eventually affect businesses elsewhere.
Sea-level rise poses risks to low-lying agricultural areas, while saltwater intrusion into groundwater could affect farmland even before it is permanently inundated.
“If you are a business that relies on rice, this is your weak point when it comes to climate change. It’s not your factories – or could be –, but in your case, you need to start thinking about where you’re going to get your rice from,” he said, adding that local production could be affected as sea levels rise.
Malaysia imports about 40% of its rice, but Chen cautioned that relying on imports may not eliminate the risk, as rice-producing countries could face similar climate pressures.
“Even if they are exporting to us, the prices may go up. So we are not going to outrun this problem. If we have this, they have this too,” he said, adding that countries may also impose rice export restrictions to protect domestic supplies.
He also raised the possibility of a longer-term shift from rice to other staples, such as corn, although such a change could be disruptive for people accustomed to having rice as part of their daily diet. Businesses such as restaurants may therefore have to consider how changing food supplies could affect them.
Chen also warned that even a small disruption to food supplies could have a much greater impact on prices. Using a hypothetical 5% decline in rice production, he explained that even a relatively small reduction in supply could lead to a much larger increase in prices, particularly when market speculation comes into play.
For businesses whose operations rely on external suppliers, raw materials or markets, such disruptions should be part of their climate resilience planning.
His example illustrates how a business can be affected by climate change even when its own physical assets are not directly damaged.
Assess climate risk from the ground up
Understanding climate risks also requires companies to look closely at individual sites rather than relying solely on broader assessments.
“The first thing to do is to carry out a climate risk assessment,” Chen said.
“Every site, if you are a property developer, should have its own climate risk assessment. It doesn’t have to be super detailed, but it has to take into account the observations locally on what the big issues are.”
He cited the example of a building reported as having never flooded, even though its car park experienced regular flooding.
Similarly, a building may not experience flooding from the ground, but water could enter through its roof during heavy rain.
Such problems may not always be reflected in formal assessments, making observations from people familiar with the site particularly important.
In addition, publicly available climate datasets, including those covering temperature and sea-level rise, often lacked the geographical detail needed to assess risks at individual locations, Chen added.
“So, really, the best way to define which assets are at risk is just go down on the ground and ask the people who live there,” he said.
“They will usually tell you where the pain points are.”
Preparing people, not just places
Ultimately, climate resilience will also depend on how people respond to change.
Chen cautioned that while much attention is given to the physical impacts of climate change, its social consequences could be underestimated.
For businesses, this means preparing not only their physical assets, but also their employees and customers for the changes climate change may bring.
“The main resilience point, aside from the infrastructure, is the human side,” he said.
