HIS ROYAL HIGHNESS
SULTAN NAZRIN MUIZZUDDIN SHAH
GLOBAL COMPACT / ASEAN ESG SUMMIT
DATE: THURSDAY, 24 NOVEMBER 2022; TIME: 10.00 AM
VENUE: EQ HOTEL, KUALA LUMPUR.
‘DATA DRIVEN SUSTAINABILITY:
ACCELERATING ESG IMPACT FOR ASEAN’
Ladies and Gentlemen,
- The market economy as we know it may be on the edge of a precipice. The climate crisis that we are undoubtedly now facing poses a clear threat to global trade, and therefore to global growth and development. Adverse climate-related events are occurring with increasing regularity, and increasing intensity. As the negative impacts of these devastating events accumulate, they are likely to lead, sooner or later, to market failures. These, in turn, could result in social instability.
- These worrying trends should be of particular concern to ASEAN members, as a substantial portion of our region’s revenues are generated through global trade flows. Our members are also, of course, highly vulnerable to the warming climate. The Philippines, Thailand, Myanmar, and Viet Nam, have been particularly badly hit by adverse weather events in the last 2 decades. Typhoons and floods, as well as unusual dry spells, are all becoming more intense and frequent across the region. This includes here in Malaysia.
- The mounting economic fallout, as such disasters continue to occur, could be devastating. The Asian Development Bank estimates that Southeast Asia as a region could suffer bigger losses than other regions. The Bank estimates that if left unmitigated, the climate crisis could shave 11 percent off the region’s GDP by the end of the century. This is due to its toll on key sectors including agriculture, fisheries, and tourism, along with its negative impacts on human health and productivity. Such an outcome would essentially reverse much of the hard-earned socio-economic progress that the region as a whole has enjoyed over the past five decades or more.
- In order to address this multi-faceted crisis, meeting the Sustainable Development Goals, (SDGs), has become more important than ever. Many if not most of the SDGs are highly relevant to the climate crisis, whether directly or indirectly. Progress on them helps to build resilience, and to mitigate the effects of climate-related disasters when these occur. Corporations and businesses have a major role to play in this process, with the support of organizations like the Global Compact. By acting more responsibly, and by harnessing its own plentiful resources, including human capital, technology, and innovation, the corporate sector can and must make a significant contribution to the achievement of the SDGs.
- Since their inception in 2015, the world has been making steady progress towards the SDGs, albeit not uniformly, and at a slower pace than that required to meet their 2030 deadline. On average, from 2015 to 2019, overall progress was gradually being made on all the SDGs. ASEAN members were even doing better than other parts of the developing world. Corporations, in this region and beyond, were also playing their part, contributing to various of the 17 goals – such as Goal 3 on Gender Equality, for example, by strengthening women’s rights in the workplace.
- The Covid-19 pandemic unfortunately then pushed the SDG agenda onto the back-burner. Governments around the world were forced to divert their attention away from development and the climate crisis to meet the more pressing needs related to the pandemic. Companies had to focus on overcoming the immediate challenges and disruption resulting from the pandemic. The average SDG Index score has thus slightly declined, and no overall progress has been made towards meeting the SDGs in either 2021 or 2022. However, sufficient time still remains to achieve at least some of these goals within the original timeframe, if they are treated with the requisite urgency.
- Major disruptions such as the pandemic often lead to the adoption and implementation of bold and innovative ideas. This pattern has manifested repeatedly throughout history, and the Covid-19 pandemic may be no different. Indeed, various recent innovations relating to data-gathering and dissemination appear to have much potential to help get the SDGs back on track. The corporate sector has much to contribute to this process, especially as it strengthens its own Environmental, Social and Governance (ESG) metrics and reporting mechanisms. The focus of this event on the data-related aspects of the SDG challenge is thus timely and welcome.
Ladies and Gentlemen,
- The importance of data gathering and dissemination – a process sometimes termed ‘data curation’ – cannot be understated. It is often said that “What we don’t understand, we ignore. What we don’t measure, we don’t manage”. This adage very much applies to our pursuit of the SDGs. Quality data on sustainability-related matters remain sparse and inadequate. The difficulties involved in accessing the necessary data were highlighted recently, for example, by the Malaysian Joint Committee for Climate Change, or JC3, as part of its preparations for a data catalogue for the Malaysian financial sector.
- In order to address this data deficit, we must diversify the data modalities that have traditionally been used. Data related to sustainability issues must also be democratised. The relevant data should be easily accessible to all interested parties. This would strengthen data-informed decision-making, and thus contribute to more effective implementation of the SDGs.
- Dissemination of such enhanced and expanded data-sets would also help create greater awareness of the climate crisis and all its complexities, beyond the realms of the sustainability and development specialists. This could displace the repetition of rhetorical pleas, and help to secure buy-in to the sustainability agenda from a broader range of stakeholders, including government agencies, corporates, NGOs, and the general public.
- There has been a surge of late in innovative data-curation methods and programmes. This has been driven to some extent by the need to better understand, monitor, and manage the spread of Covid-19. These same innovations can now be scaled up and leveraged in the service of the SDG agenda, and to fight the climate crisis.
- Several aspects are of particular interest. The first is the use of non-traditional data sources. These include citizen science and satellite data. To give a local example, surveys of coral reefs around Tioman Island were conducted by the Department of Marine Parks in collaboration with the NGO Reef Check Malaysia, and with the assistance of volunteers and representatives of local stakeholders. This citizen science approach proved most successful. The baseline map it generated highlighted differences in the health of coral reefs on the west and east sides of the Island, which led to the creation of three distinctive priority zones to enhance reef conservation strategies.
- Meanwhile in Thailand and the Philippines, Earth Observation imagery has been used alongside household surveys and census data to assess poverty levels more accurately. The imagery provides additional details, such as on housing density and standards, or the location of water sources. Open access satellite data, such as that collated by Global Forest Watch, is now widely used to monitor deforestation and other ecological changes. This provides an accurate, credible and real-time source of information on land-use change. Corporations are able to use this data in various ways, including to show they are fulfilling their no-deforestation commitments, in furtherance of SDG 13 on Climate Action, as well as Goal 15, Life on Land.
- Another welcome innovation is the reporting of data using dynamic dashboards. The UN Global Compact, for example, is launching an enhanced digital platform in 2023 for the Communication on Progress (CoP) – the annual disclosure requirement for participating companies. This new CoP platform will enable participating companies to understand, measure, track, and disclose their progress on the UNGC’s Ten Principles, as well as their contributions to the SDGs.
- In Malaysia, the Sustainable Development Solutions Network or SDSN, has launched a state-level dashboard for SDG performance. This ‘SDG Monitor’ includes interactive maps, which show SDG performance at the local level. Based on data from the Malaysian Department of Statistics, the platform also includes the impact of the COVID-19 pandemic on selected SDG indicators.
- Innovative data management platforms are also being used to help strengthen companies’ efforts to reduce their direct contributions to the climate crisis. Moving towards net zero emissions in their own operations and their supply chains, has become an increasingly important element of ESG commitments for many companies across sectors. Decarbonisation in this way may even become part of regulatory systems – something called for by the over 100 CEOs of leading companies in the Alliance of CEO Climate Leaders in their open letter to the recent COP 27.
- Accurate and comprehensive measurement is highly challenging, however especially for indirect, or so-called Scope 3 emissions. One ASEAN company, Singapore-based Terrascope, has developed a smart carbon measurement and management platform to help resolve this data problem. The use of data-driven tools such as this can thus help companies to fulfil their own ESG goals, and to demonstrate credibly that they are doing so. These contributions in turn drive forward the SDGs.
- Predictive Analytics for ESG preparedness is another key area in which data can play a useful role. This approach applies Big Data Analytics, analysing structured and unstructured data using advanced AI algorithms. It is no longer enough to gather data only on current trends or actions. We must also apply the data to envisage possible future risks and scenarios. Big data analytics allows this to take place on a significant scale, generating credible insights across a range of indicators, which in turn form the basis for more appropriate mitigation measures. These must be deployed to limit the significant losses that will otherwise be suffered if we are caught unprepared for climate-related disasters and challenges – whether in repair and reconstruction costs, let alone health impacts and loss of lives.
- Another area important for building up our resilience is what are referred to as Nature-Based Solutions. These can be highly effective in mitigating climate disasters, with many encouraging examples set out in a recent UNDP Brief on this topic. As this report states: “The conservation, rehabilitation and climate-informed management of biodiversity and ecosystems increases resilience to climate change and provides low-cost and long-term solutions to protect lives, livelihoods and infrastructure, and advance progress toward the Sustainable Development Goals.” It suggests that this approach is therefore “..one of the most effective pro-poor approaches to climate change adaptation by way of enhancing the adaptive capacity of the most vulnerable communities.” It is thus important that ASEAN members, and their business communities, study these alternative solutions seriously, with a view to harnessing their potential roles in mitigation.
Ladies and Gentlemen,
- There is growing public awareness and concern around sustainability issues. Many in the younger generation especially, ‘generation or gen. z’, genuinely care about whether the values of the corporations they work for and buy from align with their own. They want to know whether sustainability commitments and claims are sincere, or if they are just ‘green-washing’. In order to meet this unyielding demand from them for genuine actions, one thing corporations must do, is to facilitate open access to their own sustainability-related data.
- I would even go so far as to suggest that the transparent provision of credible and comprehensive sustainability data should become an essential aspect of ESG commitments. It should be undertaken voluntarily by companies, going beyond the mandatory sustainability reporting schemes that most corporations are already subject to. To that end, I would encourage corporations to establish and maintain something like a ‘Corporate Sustainability Open Data’ online platform, or CSOD for short. CSODs must be accessible to the public, and consist of relevant data on all sustainability-related issues. CSODs should also provide information on the company’s future sustainability goals, so the public can keep track of their implementation and progress.
- One good example of a CSOD already in operation is the “ESGenome” – a digital disclosure portal launched by the Singapore Exchange (SGX). This portal facilitates the reporting of ESG data in a structured and efficient manner. The data made available on ESGenome can be freely accessed by investors and other stakeholders, thereby helping them to make informed decisions relating to their investments and corporate evaluations.
- CSODs will also serve to assist in changing social norms. Data made available on these platforms can be harnessed to bring about behavioural change, including by helping to address lingering scepticism. This unfortunately persists, both about sustainable development in general, but especially about the climate crisis in particular. False narratives can be explained away in a far more timely, accurate, and convincing manner, when sufficient relevant and effective data is being employed to this end, using a range of means and media to convey it. With this data, the actual situation, in all its messy, complex, but necessary detail, can be more fully grasped, and by many more people. Only then can it be effectively tackled.
- Companies and government departments across ASEAN must be able to demonstrate convincingly to their populations that all policies being developed to address the climate crisis are fully justified by the data. They must also be able to show that they are following through in practice on these policies, and meeting the targets that have been set. All of this is only possible through the use of credible, transparent, and longitudinal sources of data.
- The sustainability agenda can thus benefit greatly from the proliferation of data-points, data-sets, and means of presenting data, that we have witnessed over the past decade or more, and which continues apace. These data-centred and data-generated insights can provide us with a better understanding of our current reality in the first half of the 2020s, as well as with how the climate crisis is likely to unfold, moving forward. By facilitating our understanding of the situation on the ground in greater detail, data in itself will enable more effective approaches to be developed in response.
Ladies and gentlemen,
- Despite the many ways in which we are so far failing, and failing badly, to make the urgent and sweeping changes that are necessary to address the climate crisis, I, for one, remain hopeful. At the recent Cop 27, again despite significant shortcomings, important progress was also made, in the agreement to establish a new fund for loss and damage. This reflects an acceptance on the part of rich countries – responsible for the greatest emissions historically – of their moral duty to support those bearing the brunt of the impacts. As we know, these are generally developing countries with the lowest emissions, both historically and to date, and which are the least able to withstand these devastating impacts. The framework of the SDGs may provide an effective means for channelling these new loss and damage funds to those in the greatest need.
- So the grave predicament that we face today – in relation to the climate crisis and socio-economic inequalities – can, and must, be resolved for the generations to come. All of us have an urgent role to play in this process, including the corporate sector, through its ESG commitments and its more stakeholder-driven approach. We must ensure that this is our legacy, for our children and grandchildren’s sake.