Malaysia’s sovereign wealth fund Khazanah Nasional has launched a sustainability framework and announced a series of medium-term targets to deliver sustainable value for itself and its investee companies by integrating environmental, social and governance (ESG) considerations into their core business.

The sustainability framework is designed to be holistic, captured under the three main pillars of ESG, and focuses on issues with the most impact on the organization and its portfolio, according to the fund.

Khazanah’s managing director Dato’ Amirul Feisal Wan Zahir says: “To execute a coherent response to sustainability, we will adopt an all-of-Khazanah approach – covering all aspects of how it behaves as a responsible investor, as a sustainable organization, and as a good corporate citizen.

“This means that sustainability is embedded into everything that we do from how we manage our investments, to how we operate as a firm, to how we support and contribute to the societal development objectives of the nation.”

Amirul Feisal also emphasizes that as the country’s sovereign wealth fund it is pivotal for Khazanah to ensure that its actions support and encourage a responsible transition towards a more resilient and inclusive economy.

ESG targets

Because of the diverse and complex make-up of its portfolio, Khazanah will collaborate with its investee companies in arriving at a more sustainable business model, while ensuring that these companies remain competitive and resilient.

Within the environmental channel, Khazanah has set a target to achieve net-zero emissions by 2050 and will be working towards carbon-neutral operations by 2023, dynamically assessing ways in which it can eliminate its emissions footprint through better work practices, together with funding initiatives and projects providing a carbon offset.

On the social front, the wealth fund aims to enhance diversity, equality and inclusion policies and programmes and will work towards ensuring 30% of the boards and senior leadership positions are held by women by 2025.

From a governance standpoint, Khazanah will enhance board competencies in the area of sustainability at its portfolio companies by 2024, disclose its voting principles at company general meetings by 2022, and include ESG-linked key performance indicators (KPIs) for key leadership positions for its portfolio companies by 2023.