29/04/2026

ESG WEDNESDAY | APR 29, 2026

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Scope 3 crunch to redraw Asean supply chains o View of ESG shifts from compliance to test of business resilience

IFC, OCI TerraSus team up to advance Malaysia’s semiconductor push KUALA LUMPUR: The World Bank Group, via its private sector arm the International Finance Corporation (IFC), has partnered with OCI TerraSus Sdn Bhd (OCI TRS), a unit of South Korea’s OCI Holdings Company Ltd, to advance Malaysia’s participation in the global semiconductor supply chain and create jobs in the country. They said the partnership would also drive enhancements in IFC’s environmental, social, and governance (ESG) stan dards and management systems. “Central to this collaboration is the development of a clean energy-powered manufac turing facility for ultra-high purity semiconductor-grade polysilicon in Bintulu, Sarawak, through a joint venture with Japan’s Tokuyama Corporation. “Through this partnership with IFC and expansion in the global semiconductor supply chain, OCI TRS targets active enhancements to its corporate governance and management systems, ESG capabilities, tech nical advancements, competi tiveness and long-term resi lience,” they said in a joint statement. They said that under this collaboration, IFC will provide OCI TRS with a loan facility of up to US$125 million (RM493 million), which will primarily be used to construct the state-of the-art manufacturing facility, the first of its kind in Southeast Asia. OCI Holdings and OCI TerraSus chairman Lee Woo Hyun said the partnership is a key driver in strengthening management systems, ESG practices and long-term com petitiveness as a global company. “As demand grows for semiconductors and artificial intelligence, the importance of high-purity materials will continue to increase,” he said. World Bank Group country manager for Malaysia Judith Green said Malaysia has significant ambitions to move up the value chain in value added manufacturing in dustries, which are major job creators, making them a key area of focus for the group. “We are delighted to support the country towards fulfilling these ambitions. “We are also encouraged by OCI TerraSus’ commitment to strengthening its ESG stan dards, and look forward to supporting the company in achieving its commitments,” she said.

oil and electronics will face increased scrutiny under CBAM rules. Meanwhile, real estate and infrastructure players are being pushed to account for embodied carbon, and financial institutions are under pressure to assess emissions linked to their lending portfolios. Taken together, these forces are accelerating a structural shift in how ESG is embedded into business strategy. For Malaysian companies, the timeline is already tightening. Bursa Malaysia’s phased alignment with IFRS S1 and S2 standards, starting from 2025 reporting periods, means companies have limited time to prepare. Acabo said the priority now is to establish a Scope 3 baseline even if initial data is imperfect and move quickly to digitise supply chain reporting. This includes investing in tools or shared platforms to standardise data collection and improve transparency. Equally important is integrating ESG into procurement and finance functions, ensuring emissions data becomes a core requirement in contracts and supplier selection. At the leadership level, boards and management teams are being urged to treat ESG as a financial issue, not just a sustainability one. Linking ESG performance to executive compensation and initiating third party assurance processes are also seen as critical steps to build credibility with investors. Companies that move early, Acabo said, will benefit from a smoother and more cost-effective transition. Those that delay risk facing higher costs, regulatory penalties and, ultimately, exclusion from key supply chains. fundamental. This conference exemplifies how, through our cooperation with UNDP and other partners in Malaysia, we can strengthen partnerships between governments, businesses and civil society, and advance rights-based resilience through dialogue, collaboration, and shared learning,”she said. Across plenary sessions, sector spotlights, and working labs, delegates engaged with pressing questions at the forefront of corporate sustainability in Asia. This included debates on whether environmental, social and governance (ESG) approaches are sufficient, or if stronger mandatory due diligence is needed to protect communities and ecosystems. Fireside chats with industry leaders from technology and agriculture examined how innovation and sector-specific pressures are reshaping environmental, social and operational risks, while Resilience Action Labs focused on how businesses can integrate human rights and environmental due diligence into core operations.

pricing will fundamentally change procurement,” Acabo said. “Embedded carbon will become a real cost consideration.” Despite the urgency, many companies are still struggling with the practicalities of Scope 3 reporting. A common misstep lies in defining boundaries. Firms often focus on less material emissions categories while overlooking the bulk of their upstream or downstream footprint. Data quality is another major challenge, with companies relying on inconsistent estimates from hundreds of suppliers, many of whom lack the tools or expertise to provide reliable figures. “Inconsistent methodologies across the value chain make it difficult to verify or compare data,” he noted. “Without proper verification, investors and banks may not give the data much weight.” This growing scrutiny is also sharpening the distinction between credible ESG strategies and superficial branding. According to Acabo, investors are no longer satisfied with broad commitments such as “net-zero by 2050” without a clear, costed roadmap. Instead, they are looking for measurable targets, third-party assurance and direct links to financial planning, including capital expenditure and operational budgets. “If it’s not verified, budgeted and tied to execution, it’s likely just green branding,” he said. The pressure is expected to intensify across several ESG “flashpoints” in 2026. Upstream SMEs are emerging as a weak link due to limited resources and capabilities in emissions tracking. High-emission export sectors such as manufacturing, palm environmental rights is complex business. But we can no longer afford to hide behind that complexity.” He emphasised that responsible business practices must be embedded within corporate strategy and supported by enabling policy environments. “Rights-based frameworks should not be seen as compliance exercises, but as the foundation for long-term resilience – of companies, communities and economies.” Vrki ǎ also stressed that the voices of those most affected by environmental and human rights risks must remain central to decision-making, including workers, women and girls, Indigenous Peoples and communities on the frontlines of environmental change. Deputy Head of Mission of the European Union Delegation to Malaysia, Dr. Insa Ewert, highlighted the importance of international cooperation in strengthening responsible and sustainable supply chains. “For the European Union, building resilient and sustainable supply chains is

PETALING JAYA: Southeast Asian companies heading into 2026 are facing a quiet but decisive shift in how ESG is viewed, not as a reporting exercise, but as a core test of business resilience. ESGpedia vice president Jozsef Ű BY DEEPALAKSHMI MANICKAM sunbiz@thesundaily.com

Adjustment Mechanism (CBAM) will require exporters to declare embedded emissions or face additional trade costs. The result is a cascading effect across regional supply chains. Large corporates, under regulatory pressure, are increasingly embedding emissions requirements into procurement contracts, supplier codes and tender processes. For smaller firms, particularly SMEs, this creates a new commercial

Acabo ( pic ) said the region is entering a phase where climate risk, supply chain fragility and regulatory convergence are forcing companies to rethink how they operate, particularly across complex value chains. “ESG is no longer optional. It’s become a critical component of risk management,” he said, pointing to rising geopolitical and economic uncertainty that is

reality: disclose and decarbonise, or risk losing business. “For SMEs that depend on large corporates, greenhouse gas calculations are no longer optional,” Acabo said. “Failing to provide the necessary data risks

losing key contracts.” This shift is also reshaping procurement decisions. Emissions data is now becoming as critical as price and quality, with carbon costs beginning to influence sourcing strategies. A supplier that appears cheaper on paper may ultimately be more expensive once carbon pricing is factored in. Singapore’s carbon tax, set to rise to S$45 per tonne of CO Œ equivalent by 2026–2027, is expected to amplify this dynamic across the region, even for companies operating outside its borders. “Tighter reporting and carbon

exposing vulnerabilities in sourcing, logistics and long-term planning. At the centre of this transition is Scope 3 emissions, indirect emissions generated across a company’s value chain, which are fast becoming unavoidable for exporters and supply chain-heavy sectors. From 2026, tightening disclosure rules in Singapore will require major listed companies to account for Scope 3 emissions, effectively pushing the burden downstream to suppliers across Malaysia and the Philippines. At the same time, the European Union’s Carbon Border

Business leaders convene to tackle environmental risks

KUALA LUMPUR: Business leaders, policymakers, investors and civil society representatives from across Asia gathered in Kuala Lumpur for two-days starting March 30 for the Corporate Sustainability and

resilient supply chains amid rising environmental pressures, regulatory developments and evolving market expectations. As global supply chains face growing scrutiny over their

environmental and social impacts, the conference provided a platform for dialogue and practical exchange on how companies operating in Asia can integrate sustainability, human rights due diligence and environmental risk management into their core operations. UNDP Resident Representative to

Environmental Rights in Asia (CSERA) Conference, hosted by the United Nations Development Programme (UNDP), to examine how companies can better address environmental and human rights risks in global supply chains. Supported by the European Union, the two day conference was held at the Asian Institute of

Malaysia, Singapore and Brunei Darussalam, Edward Vrki ǎ ( pic ) called on businesses and governments to ensure that complexity does not become a barrier to meaningful action. “We know that corporate accountability on human and

Banking & Finance Chartered Bankers (AICB) Centre of Excellence, marking the first time the regional CSERA conference has been hosted in Kuala Lumpur. Discussions focused on strengthening corporate accountability, advancing responsible business practices and building more

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