Due to a growing interest and demand in understanding company’s performance and practices beyond financial gains, various standards and ratings were adopted to guide sustainability reporting. Among the metrics commonly reported is a company’s greenhouse gas (GHG) emissions.

What is Greenhouse Gas (GHG) Emission?

Greenhouse gas (GHG) emissions are emissions of gases that can contribute to global warming. This includes carbon dioxide (CO2), methane (CH4), refrigerant gases, and many more. Different GHG contribute to global warming differently; for example, methane is 28 times more potent that carbon dioxide, while many traditional refrigerant gases can range from 1,000 up to 100,000 times more potent than carbon dioxide.

GHG emissions are typically from combustion sources, such as generators & vehicles that consumes fossil fuels such as diesel and petrol. Other sources of GHG emissions include refrigerant leaks from air-conditioning systems and land-use change.

Why Calculate & Report Greenhouse Gas Emissions?

There are many reasons why you should calculate and report your GHG emissions:

1. What gets measured get managed

Calculating your GHG emissions provides a greater picture of your GHG emission sources. Identify hotspots and manage these sources to minimise GHG emissions and climate change.

2. National Sustainability Reporting Framework (NSRF)

The Securities Commission Malaysia (“SC”) has published the National Sustainability Reporting Framework (NSRF), requiring listed companies to fully comply to the International Framework for Sustainability Reporting (IFRS) on a staggered phasing:

• By 2027 – Main Market-listed issuers with market-capitalisation of RM2 billion and above.
• By 2028 – Other Main Market-listed issuers.
• By 2030 – ACE Market-listed issuers and non-listed companies with annual revenue of RM2 billion and above.

In particular, NFRS S2 relates to the Taskforce for Climate-related Financial Disclosures (TCFD), which require the calculation and disclosure of climate-related metrics, including GHG emissions.

3. Sustainability Ratings

ESG ratings, such as FTSE4Good Bursa Malaysia Index, aims to support investors in making ESG investments in listed issuers, increase the profile and exposure for organisations with leading ESG practices, encourage best practice disclosures, and draw capital allocation and investment interests on ESG investing. Having a good sustainability rating depends on your sustainability disclosures, such as GHG emissions.

4. Breaking supply chain barriers and financial barriers

Due to the increasing attention in Environment, Social and Governance (ESG) as well as pressures from stakeholders, large companies are now paying more attention to supply chain risks. Further, financial institutions are facing more scrutiny on its financing activities. Reporting GHG emissions can help to demonstrate managed ESG risks, expanding your business opportunities and financing options.