How can ESG be effectively implemented in a region marked by diverse economic development, market fragmentation, and rising investor scrutiny? Can ASEAN balance profit with planet and people? Dialog ASEAN25 brings together regional experts to discuss the role of ESG in shaping ASEAN’s climate resilience and economic strategy.
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00:00This is Dialogue ASEAN 25 with me, Naila Huda, and today we want to dive into the critical intersection of climate, capital and community in Southeast Asia.
00:20And at the heart of this conversation lies a crucial question of whether ASEAN can truly achieve sustained goals without a firm commitment to ESG principles.
00:30And today we're joined by three experts who bring unique insights from academia, industry and the frontlines of community resilience to help us unpack this big question of ESG and whether these principles are enough to truly bring sustainable growth to ASEAN.
00:48First up, we have Dr. Peter Stex, Senior Lecturer at the ASIA School of Business.
00:52His research focuses on innovation, sustainability and how developing economies can navigate these twin transitions between green growth and also digital transformation.
01:04Joining us as well, we have Khairun Nisa Zabidi, Co-Founder of Nusantra Consulting.
01:08It's a conservation finance advisory which works at the nexus of biodiversity, climate action and also investment.
01:17Khairun Nisa is an advocate for mobilising private capital for environmental impact and really rethinking about how we value nature around us.
01:26And finally, we're thrilled to welcome Dr. Sreena Raman.
01:29She's a lecturer at the Southeast Asian Studies Department at the National University of Singapore and US.
01:34Dr. Sreena works directly with rural and coastal communities on conservation, livelihoods and also most crucially, social justice, especially when we're talking about ESG.
01:44And how we can ensure local voices are included in this big conversation.
01:49So, thank you very much to all our guests.
01:53Thanks for having me.
01:55First up, before we try to tackle this big question of ESG, the promises and the pitfalls of ESG in the ASEAN context,
02:05we want to look at policy, finance, but we also want to look at the local cultural context, the local realities and potentially alternative models of sustainability.
02:15I think it's important to get this broader picture of what's actually happening.
02:22Perhaps Dr. Peter can help us paint this picture.
02:25What does ESG actually mean in the ASEAN context?
02:29In your interpretation, how do these environmental, social and governance priorities differ across the region?
02:36Yeah, and I hope together we'll be able to explore some of the, I guess, promises and potentially pitfalls of ESG in the ASEAN context.
02:46We want to look at policy and finance and also, most importantly, the local realities, see what actually happens on the ground.
02:56And perhaps we can also leave some time to talk about potentially other alternative models to sustainability.
03:02But before we go into that, I guess it's better to sort of paint the broader picture of what's actually happening, what we're trying to unpack today,
03:11the meat of the issue really, looking at ESG in the ASEAN context.
03:15And perhaps Dr. Peter, you can help to paint us this picture.
03:18What do you think ESG actually means in the ASEAN context today?
03:23And how do, you know, if you look at these different elements, environmental, social and governance priorities, do they differ across the region and how?
03:33No, thank you for that question.
03:34I think it's useful for the listeners to kind of go back to what are the origins of ESG.
03:40So the concept of ESG dates to maybe the late 1990s when the United Nations came up with the principles for responsible investment.
03:48This was being championed by Kofi Annan, then the Secretary General.
03:53And he basically tried to bring together the UN, kind of the important intergovernmental organization, with the corporate sector, with Wall Street.
04:02And that gave rise to the Millennium Development Goals and then now the Sustainable Development Goals that came after that.
04:09So essentially, it's the argument, ESG is the argument, that big business and government should work together to kind of solve these global problems.
04:18Now, I would say within ASEAN, because most of ASEAN is still a developing country, social concerns actually dominate a lot of the conversation.
04:27Although perhaps in the media, when we talk about ESG, we often talk about E, the environmental component.
04:35And given the diversity we see in ASEAN, there can be many different drivers that affect different countries, different sectors in different ways.
04:43So looking at it from more of a business perspective, ESG is heavily influenced by supply chains and by the global financial system.
04:54For less developed countries, it's very influenced by official development aid.
04:58So depending on how integrated a sector or a country is, kind of they are faster with ESG adoption than in other cases.
05:06You also see a gap between energy importing countries and energy exporting countries or commodity exporting countries like Malaysia.
05:16So Malaysia is a big palm oil exporter, big oil and gas exporter.
05:20And that actually makes it a bit of a laggard in terms of some environmental energy transition adoption things, even though Malaysia is a relatively wealthy country within ASEAN.
05:31And I think the final point to make is that many ASEAN countries don't have this kind of pure American style shareholder capitalism.
05:41We've got a lot of GLCs. We've got a lot of state involvement in the economy.
05:45We've also got a lot of family owned businesses.
05:49And these kinds of organizations, they like to emphasize ESG.
05:52They like to emphasize more than just profitability.
05:55And so I think that's another factor that can explain differences between sectors and ASEAN countries.
06:03A lot of interesting points there.
06:05And I think that note on the emphasis on the E element of ESG, I'm pretty sure our other panelists would have a lot to say about the S and the G.
06:16Potentially, I think the S a lot more.
06:18I think there's, I would say, a lot less emphasis on the social aspect of ESG.
06:24But before we go into that, you know, ESG has been the popular buzzword for, I think, the past decade or so.
06:31But to put into the ASEAN context, why is ESG now being viewed as something that's very critical to meeting ASEAN's climate goals,
06:40especially now looking at the age of post-COP 28?
06:43Well, I think it's partly because governments are very reluctant to adopt certain regulations.
06:50And so emphasizing ESG as kind of placing the responsibility on the shoulders of large corporates to move the climate agenda forward.
06:59We've seen this in Malaysia with Petronas, with TNB, all adopting net zero commitments.
07:05Is a kind of way, perhaps, for the government to buy it some more time before it comes in with regulations such as a carbon tax and whatnot.
07:14I'm not necessarily saying that the emphasis on ESG is misguided.
07:19But I would say that it shouldn't be an excuse not to have government regulation come in,
07:25which is very important for the large corporates, but also the smaller ones.
07:29Just quickly going back on what you said about GLCs and a lot of state involvement, they tend to lean towards ESG.
07:39I guess that's something that's not what I assumed.
07:42Why do you say so?
07:43I think one way of looking at it, before there was ESG in Malaysia, we had the new economic policy, for instance, right?
07:52And affirmative action in that way.
07:54You could say that there was also kind of an early form of ESG.
07:57And very often, if you read reports about state-owned companies, they tend to emphasize their social role,
08:06their role of stewardship of the nation's economy, the nation's development,
08:11sometimes to justify why their profits are perhaps not at the level that some investors would expect them to be.
08:16But basically, they emphasize that they have a broader social mission within the country.
08:23And I think, given that origin, they are quite likely to keep emphasizing ESG.
08:29It fits very well within the narrative that they have.
08:32Okay, now, I hate to be cliched, but as you say, there is a lot of emphasis on the E part of ESG.
08:38And I do want to go into that, at least now, to look at the environmental aspect of ESG.
08:44Okay, Kairunisa, what do you think?
08:46When we're talking about the ASEAN context, what we do see happening is ASEAN countries have updated their NDCs,
08:54their nationally determined contributions, working towards lower emissions and whatnot.
09:00But how far do you see ESG investments actually go realistically in helping these targets?
09:07Yeah, thanks for that question.
09:08I think I'd be really keen to just kind of engage with Peter's kind of thoughts earlier.
09:13I think what I find really interesting is the term ESG itself is used so interchangeably with other types of the language.
09:22So I think literacy, or at least our understanding of what we mean, may differ.
09:27So, for example, we see that ESG as a term used interchangeably with terms like the triple bottom line,
09:35or sometimes we use the word sustainability, but actually they're two very different terms.
09:42Sustainability means being able to do things perpetually, for example.
09:46And now the hot term that I think a lot of the folks in the sector are using is regenerative.
09:52Can we be regenerative as a collective, as a society, right?
09:56But if we're scaling it down to just the term ESG and how it's understood, at least by the corporate sector in the commercial space,
10:03then, you know, that it narrows it down quite significantly in terms of the conversation we're having.
10:07And sort of engaging directly with your question on whether or not ESG's investments are sufficient to meet at least the regions NDCs.
10:17I think that's a really tough question to answer.
10:18I think primarily because how we define ESG investments is also very broad.
10:24So, for example, it would be a subset of climate finance.
10:28And as Peter mentioned earlier, some of that would be, you know, we would consider overseas development aid as part of climate finance.
10:35But if we're looking at just private sector investments, so we're kind of looking at do we have an understanding of the gap of how much it's actually needed for us to meet our climate targets?
10:43That in itself is not something we fully understand, right?
10:47So, if we zoom it down to kind of how much does the region need for us to meet our NDCs, lots of different reports.
10:54Just for Malaysia alone, like the BCG has a different number.
10:57Our JETP has a different number.
10:58The Malaysian government cites a different number.
11:00So, it all really depends on how we're actually attempting to meet the NDC.
11:08If we zoom it down to Malaysia alone, we're looking at, you know, a certain, I think 90% of what we cite in the prime minister's office, for example, looks primarily at the energy transition.
11:20And that's only in the mitigation space.
11:21But there's also quite significant financing that's needed for adaptation, perhaps.
11:26And as you mentioned, you know, climate risk, flooding.
11:28We're seeing a lot of that in this part of the world.
11:29We're not seeing as much go into that, go into those type of initiatives or at least the adaptation sector.
11:38If we're looking at the region broadly, a lot of what some of the regions or countries that are attracting the Just Energy Transition Partnership, for example, in Indonesia or in places like Vietnam.
11:49And this is sort of a facility that supports transitioning away from coal.
11:54So, as we know, as we transition away from high fossil fuel industries, because if we think about it, decarbonisation is a pathway, right?
12:03Our region is very locked into a very high fossil fuel heavy development.
12:07And for us to shift that, we're going to need quite significant finance.
12:10And so, the JETP attempts to look at long-term financing, like coal power plants, where we've committed like 30 years of financing into, and in effect, you know, we transition to renewables.
12:22Those assets would be, did assets on the bank's books, which then affects things like financing and the bank's abilities to continue to loan.
12:31And so, those type of initiatives, I think, we're attracting quite a lot of that here in this part of the world.
12:37So, we're looking at partnerships such as blended finance, for example, projects that look at partnering between government as well as the private sector.
12:45We're seeing more of that.
12:46But the real challenge in really scaling ESG investments, look, I think it goes back to first the financing gap.
12:54We're also looking at how a lot of countries in ASEAN essentially have conditional NDCs.
12:59So, what this means is that we are only going to be committed to meeting our NDCs if we actually receive aid and financing for it.
13:08So, then it becomes like a bit of a political tool, isn't it?
13:11And then there are investment risks as well in this part of the world.
13:15And we see that in some regions like Myanmar, less stable, very small countries that are still growing in economy, countries like Vietnam.
13:25So, all this taken into account, I think, really defines how financing flows and investment flows into this part of the world.
13:45A lot to unpack there, a lot of really interesting points.
13:55But I think earlier on, you did say something about there being a bit of confusion about the terminologies being used interchangeably.
14:04We're hearing a lot of regenerative being used now.
14:07We used to hear a lot about the circular economy and whatnot.
14:10Dr. Sreena, if I can get your thoughts just quickly on this, do you think that the use of these sort of terminologies, this jargon, perhaps, I think that's what Greta Thunberg would call it, a lot of jargon being used.
14:29Is this, do you think, a part of greenwashing?
14:33Is this just good PR or is there actual work being done here?
14:37Yeah, I'm an academic that doesn't like the big words, to be honest.
14:44I do my work.
14:45That's quite rare.
14:46I believe it.
14:47No, yeah, I can't understand half of it, really.
14:50So, that's just, you know, and it's not easy for students to pick up on it, too.
14:54And I find also I have a marketing background at one point.
14:59And really, a lot of this is good sell, right?
15:02I mean, the whole purpose of ESG, to be honest, and, you know, I push the boundaries in what I say because I'm not necessarily tactful.
15:10But really, what ESG does is enables businesses to keep going as per normal and find loopholes and ways to sort of show that they are sustainable.
15:21But they're still using the energy and resources that they're using to make the profit and, you know, using capital and financing, whatever that they've always been doing.
15:31So, it's just another way to sort of justify their existence, to cushion what they're doing.
15:36And lots and lots of big words and catchphrases and jargon that makes it sound so much better.
15:42I'm sure there's good intent in many places where, you know, you can use this money to buy up entire forests and make sure that they are reforested.
15:53You know, there's money that people want to spend on blue carbon.
15:56But on the ground, what does it really mean?
15:59How does this actually offset the losses that people and the planet are suffering as a result of overproduction, overconsumption, this kind of thing?
16:11I'm quite iffy about how effective it is when you get down to the ground and to the crunch.
16:18You know, when I'm involved at sea, obviously, so I know a lot more about that than what happens in the forest.
16:24You know, when it comes to things like, oh, mangrove planting, because we know how much carbon it offsets, seagrass replenishment is something that they're doing now for blue carbon because they realize how much carbon seagrass captures.
16:41Because a lot of this is big PR, you know, things like this, as long as the habitats behind my picture, if development pauses along the coastlines, if we stop damaging these habitats, they will grow back.
16:55That's how nature finds a balance.
16:56But if we are intent on, oh, let's dig up this part because we need to continue with our development plans and let's think up for it by planting something here, the success rates are really small.
17:07And so you're doing that, but you're not also not necessarily monitoring it or seeing whether these planting programs, for example, are actually working.
17:16It's a lot of, let's go plant mangroves, take a photo and oh, we've done this, we calculate our carbon offsets, we've got big media coverage, you know, we involve so many fishermen, we held all these children, came and did it.
17:30What does it actually mean on the ground?
17:32In 30 years, are those trees there?
17:34How does that help local livelihoods that you've cleared away because you've, you know, reclaimed half of the shoreline?
17:41How does that actually translate in the long term for local economies?
17:44A lot of these things that are being done are also very top down.
17:48So where's the local input from the people who are directly affected by these things?
17:53If I may, just kind of, yeah, challenge you a little bit.
17:56All with you, first of all, all with you.
17:58But I just wanted to like throw in a bit of a spanner in the works just for conversation.
18:03So I agree broadly.
18:04And I think a lot of what you said really lends to kind of old hat thought of CSR programs, right?
18:10Let's find the closest place we can put in this mangrove tree and then take a picture next to it, right?
18:14So, you know, when we first introduced our first set of reporting guidelines in 20, I think it was 2006.
18:20Malaysia was the first in the region.
18:23And we did see a huge kind of wave of this type of activity, right?
18:27But the advent of the carbon markets really interests me, primarily because the standards for carbon integrity is so high.
18:33And it requires project developers to tell us upfront how the monitoring, reporting and verification process for these projects will actually run.
18:41So I don't know.
18:42But I find that these standards mean that projects will now have to undergo quite stringent, which we've never seen in our old kind of CSR investments,
18:51requirements for project investors and developers to actually look at more robust MRV processes, which I think is, I find very exciting.
19:01So, you know, we can look back in 30 years and see, okay, this seagrass here, which, you know, sequesters, what, something like 27 times more efficient.
19:09Oh, yeah, there you go, 35, then your average, like, boreal forest.
19:14But it's really quite exciting to see, like, Asia, in this part of the world, we're at the equator.
19:19And we see ourselves as, like, you know, the most efficient carbon stocks, but sequester carbon as well.
19:25Could that be, could that process, at least in the carbon markets and the requirements for buying and developing credits,
19:32actually improve some of the activities that you're kind of raising?
19:35I think there is a gap between what we're doing in terms of reporting and the requirements that are being done and what is actually happening on the ground.
19:45So we have, in recent years with this community that I work with, you know, developed this tree planting thing.
19:52After one and a half decades of resistance, you know, my friends were saying, look, at the very least, it's a source of income for the community.
20:01And so I will go out there and say, okay, if you want to plant trees, we need monitoring programs.
20:07You know, you guys are not interested, but this is what we do.
20:09And companies will come back to us and say, no, exactly what you said.
20:13No, we have to report by these standards.
20:15We need to do this.
20:16And I'm like, okay, so then provide the funds for us to do this or you come down and let us know.
20:22So this recent run of planting has taken place over the last three years.
20:26We had a great funder from, through sort of a matching NGO, and so we had funds from the U.S.
20:32They are asking us for reports.
20:34But other local, let's say, Malaysian, not that we are specifically bad because we're local, but, you know, the ones who are actually here and saying, look, we're going to put in some money.
20:44We're going to plant some trees.
20:45We are interested in the long term.
20:47They don't come back for the monitoring.
20:49And when I ask them, don't you need to report this?
20:51They're like, oh, no, it's fine.
20:52And so, you know, there is a difference between, and you can cook numbers, right?
20:58So there is, yes, you have all of these policy requirements.
21:01Yes, there is evolution.
21:03But what is actually happening on the ground?
21:05And how still does that translate into benefits to local people?
21:09And why is there a need to spend money on this when this stuff will grow back naturally if you just don't disturb it or you cover out, carve out spaces where it's not disturbed?
21:23So you see, we're spending money where we've destroyed things, whereas we can look at ways to improve livelihoods.
21:29We can look at ways to section off spaces that can be preserved, that can be sources and seeds for other spaces.
21:36So, yes, there are ways to improve, to fix the damage.
21:42But at the bottom of it, there's still damage, right?
21:45So what we're doing is we are reacting to stuff and patching things up.
21:51Peter, I don't know if you want to jump in and add on.
21:54I think we were both at sequestration and blue carbon.
22:02Yeah, you've lost us there.
22:03But I think if we were to go along that notion, we might have to throw out E entirely from ESG.
22:10You know, it's all greenwashing.
22:12It's all PR.
22:13So perhaps we can move on to the S part of ESG to look at, you know, social responsibility, to look at livelihoods.
22:19Because Dr. Sreena also mentioned that important part about locals wanting to make a livelihood, wanting to make an income, right?
22:26So that's an important aspect to this.
22:28Dr. Peter, you might want to comment on that a bit.
22:30But if you were to look at current ESG frameworks, the standards that's been set, is there enough being done to support job creation, to support livelihoods, social equity in these climate adaptation efforts?
22:44Well, this is a good question and very interesting discussion earlier as well.
22:49I think if we do interviews with a lot of ASEAN policymakers, they at least pay a lot of lip service to vulnerable groups.
22:59Think about whole curves, the lower income groups and so on.
23:03And it explains, for instance, why Malaysia is struggling to remove fuel subsidies, for instance.
23:09Essentially, we are now subsidizing the emission of greenhouse gases, right?
23:13That's one way of framing it.
23:14And so I think many policymakers are mindful of this.
23:20At the same time, I think they're often they have a difficult tradeoff.
23:23And Sreena makes a very good point.
23:25If you stop destroying the environment, you don't need to place it back, right?
23:29But there are pressures to develop, to do new things.
23:32And you need to weigh as a society whether the benefits from that outweigh the costs.
23:38And that's often going to be a difficult question.
23:41Now, if you specifically look at the energy transition aspect, especially for Malaysia,
23:47solar panel installation makes a lot of sense to reduce greenhouse gas emissions.
23:52And that is an area that's relatively labor intensive.
23:56It's also an area where you kind of need medium skilled labor.
23:59People can be upskilled and earn quite good income from that industry.
24:05Whereas a lot of other like large scale sectors like oil and gas or maybe even coal power plants,
24:12they tend to be very capital intensive, but not particularly labor intensive.
24:16So I think while the labor discussion is important, and of course,
24:21if the transition happens too fast in a particular area, it's an area of concern.
24:27I wouldn't say that the social aspect is something that should stop you from doing a lot of the environmental things.
24:34I think there are ways that you can do it in a way that is ethical and that's a part of global communities.
24:39I think there are ways that you can do it in a way that is mindful of the social aspect.
24:59Karanissa, perhaps you have any thoughts on this if we were to go into the S aspect of the ESG.
25:06I guess arguably tend to be overlooked.
25:11Any thoughts on how this green transition can be more just, more inclusive,
25:16especially to look at vulnerable communities, small businesses, SMEs in the region.
25:24How can they be more included, involved in this transition?
25:28I think there's no silver bullet answer, honestly.
25:31But primarily, quite a lot of standards, at least international standards,
25:35are attempting to bake in requirements or standards to allow for social and community benefits.
25:45So for example, when we look at the carbon credit market,
25:48while the top standards have very high carbon integrity requirements,
25:53so how do you measure carbon?
25:55Because when we talk about climate change, primarily that's sort of the big interest in terms of decarbonisation, right?
26:02But a lot of these standards are now adding in an additional S and G component to it.
26:09So for instance, there's something called the CCB, which is the Community and Biodiversity Benefits,
26:14which are considered co-benefits to projects, making projects a lot more attractive to potential buyers.
26:20So when you're developing a particular intervention to, for example, you're looking at nature-based solutions.
26:25We've got floods in places like Johor.
26:28Could we invest in sponge cities, for example, that China has quite extensively invested in to deal with those floods?
26:34So if you look at it from a pure climate point of view, then potential investors will just be looking at how much carbon can we sink?
26:42So you're just looking at trees, putting in high carbon sequestering kind of processes, right?
26:50Or even if we look at CCUS, that's also pure carbon.
26:54But then you can add an additional layer of biodiversity and community benefits to that.
27:01And therefore it would make the potential price per carbon or price per hectare a lot more, a lot higher to buyers
27:07while looking at purchasing packaging such as that.
27:12So those are some of the ways that we can include ESG factors.
27:17I think as we move towards like, you know, more novel types of exploring more novel approaches outside of the current frameworks of ESG,
27:26things could look very, very different.
27:28But if we're just kind of focusing in on that engagement, I think that's primarily where I could look at.
27:34For example, I think we might discuss this later on, but I worked on the National Climate Change Act,
27:40and it was a question around like how can we include Indigenous voices, for example, as part of this discussion.
27:46And even baking that in and engaging was very challenging because, you know, first of all, we've taken away your rights.
27:52We've basically colonized you.
27:55And then now we're asking to come to the table and help us develop language for our laws that you probably don't have language for.
28:03And you'll be, you know, that everyone are technocrats in the room.
28:06So even designing these engagements are quite challenging.
28:10So unless we flip it around and we say that there's actually quite a lot of Indigenous knowledge that you can bring to the table and design it that way,
28:17then it looks very different.
28:19But if we're just providing a token spot for someone who's for diversity, then very different conversation.
28:27Yeah, interesting point there. And I think we can go into that, going to local context, into Indigenous voices, being more inclusive.
28:37And also on that note that you made about these measurements, these standards, these benchmarks that need to be set,
28:44they're often leaning towards or lean on global targets, global metrics that's being set and they're being standardized and uniformed.
28:53But obviously we need to take into account the local context, local needs.
28:58How can we create ESG strategies? I guess I want to pose this question to Dr. Serena.
29:04How can we, I guess, imagine or create ESG strategies that are more grounded in local context, cultural context and values,
29:12and not just depending entirely on international benchmarks?
29:16Is there a way to, I guess, be more inclusive in this or is the problem still with ESG itself?
29:22Well, I think the last point that Kyra brought up was really nice, right?
29:27So you need to flip it and you need to recognize, and clearly there is movement for this,
29:33that there is a lot of local knowledge that needs to be incorporated.
29:37Academics like ourselves go to spaces, take information from local people and we publish.
29:43We don't recognize the people who give us that knowledge.
29:45Everything that I know about the Tabrao Strait comes from the local fishermen.
29:49I'm the one with the PhD, but they're the ones with the knowledge.
29:52I just happen to have this because I can write in academic language in English.
29:56So it's a very important point that they don't speak the language of the bureaucrats who are writing policy.
30:03And that then means that we are losing all of this information.
30:06You can see that at the COP level, they're making an effort, huge effort, to find this knowledge.
30:12So they have these regional meetings, they are actively inviting Indigenous people to speak.
30:18But, you know, people who are entrenched in their habitats are not comfortable going to big meetings,
30:24where there are lots of people who dress differently from them, where they have to address people.
30:29So to get the local context, you have to go to the local ground.
30:33And on a practical term, as a person who works in an office, as a person who is the liaison between government, consultancies, you know, big companies, bursa, where do you find the time to do this?
30:48How do you know how to communicate with these people?
30:52Do you then use an NGO as a go between?
30:55Does the NGO then, which happens a lot, and I've seen this, does the NGO then inadvertently put in its own goals into the conversation instead of what is truly the local view and desire?
31:09Can that local view and desire match the, you know, the government level narrative, the business narrative?
31:16Or if it doesn't match, is it going to be ignored and rejected and deemed not enough knowledge?
31:22They don't know what they're talking about.
31:24How do we flip the conversation, as Kairun said, to make sure that there is a meeting point?
31:30I think there's some really novel things that I've explored, right?
31:36Like, for example, in places like New Zealand, they're giving rights, legal rights to entities like forests and mountains.
31:44Rivers, yeah.
31:45Right, and I'm actually going through a training to represent nature as a proxy on boards.
31:50So that's something that, you know, a lot of some movements in parts of Europe are kind of exploring.
31:55It hasn't arrived here, but I think like a really novel kind of way and doors are opening.
32:03We are seeing, for instance, like I'm working on a project called the Natural Capital Accounts.
32:07And this is the first time the Malaysian government are looking to build a set of accounts that we've never seen before.
32:14Recognizing natural capital as an asset class as opposed to an extractive resource and instead as a capital that we can, you know, use for forever for our children.
32:27I think shifting governance models as well to adaptive learnings using living labs, climate assemblies, you know, are some of the more novel things we can explore.
32:37As long as, you know, these solutions are brought to places where it can be heard, I think it can scale potentially.
32:45Yes, and hopefully they can be implemented in a language that local people can understand and it's made relevant to them.
32:51There is progress on the ground where we have developers in Johor who, after discussions with them, not necessarily just by me, but with a whole bunch of other people, you know, are working towards giving up some parts of their huge plots of land for preservation.
33:07It's not necessarily regenerating, but instead of destroying, they're going to preserve it.
33:12And then through that, then how much carbon, whatever financing can they get out of it?
33:16So that's one way that people have been adapting and have been indicating that they're willing to give up some of that profit for some preservation.
33:24At the same time, they're using some funds that they get as a result of that to contribute to local communities.
33:30So there are ways. But how does that language happen?
33:33You always need to go between. You need a bridge.
33:36And this is sort of a field that people are discussing a lot more now.
33:39There's publications on it. Who is that middle person?
33:42Is it someone with the community's interests at heart to be able to be able to understand both sides of the story and communicate it?
33:51Can that person come from the community without having some kind of political position hierarchy whereby the even more marginalized don't have a voice?
34:01So finding those local, those authentic local champions is always the issue.
34:05The world is a difficult place. And at this point, it's quite dreary.
34:08But, you know, given that there are so many innovations that Kyren is saying, it really is hopefully that the policy level does take on these things.
34:17I mean, it would be wonderful if our government could give my seagrass patch in the background rights as an individual.
34:24You'll see me dancing to the moon.
34:26You know, but I wait for that day.
34:29I quite like the dynamic that's going on here.
34:32Dr. Serena offers a rather somber reality check and then Kyronisa will offer, you know, the more, I guess, optimistic view on things that, oh, you know, things are actually looking quite hopeful.
34:47And we're remaining hopeful on that. But you did mention a little bit about policies and how this needs to reflect the needs on the ground.
34:55And we're looking at fragmentation across ASEAN, not just in terms of the local cultural context and values and whatnot, but we're also looking at market fragmentation.
35:05And Dr. Peter, if you're still with us, we want to look a little bit on the market side of things as well, and also on the policy side.
35:13When we look at market fragmentation across the region, that that could potentially be a huge barrier, right?
35:18So I guess what kind of regulatory or policy harmonization that could be seen to make ESG a lot more effective across the board in ASEAN?
35:30Dr. Yeah, I would like to actually hook into that point about basically the small players versus the big players in terms of sustainability standards, to answer your question.
35:42What we very often see is that for, let's say, a sustainability standard like the RSPO, the Responsible Palm Oil Standards, Sustainable Palm Oil Standards,
35:52smallholders often struggle to comply with these standards. And there are many different reasons for that.
35:59One is that the standards tend to be designed by larger corporations, right?
36:03Large stakeholders who design a standard that kind of meets their need. They can do it at scale.
36:08And then it's kind of an afterthought is, oh, gosh, we should bring in the smallholders because we don't want to throw them under the bus.
36:14And it seems to be a kind of natural process that occurs in many different sectors.
36:21So then the involvement of smallholders is very important. But at the same time, sometimes smallholders are used to weaken the standard, right?
36:30People say, OK, we're just going to we need to incorporate these smallholders.
36:35We need to be inclusive. But really, these smallholders are not completely independent.
36:39They're actually dependent on some kind of middleman or they're part of some kind of conglomerate.
36:43So, yes, officially they're independent, but really they're not.
36:46And they're sometimes a weapon that's used to kind of erode standards as well.
36:50So I think we need to be aware of that dynamic.
36:53And I think the final interesting point about smallholders from our research is that, for instance, if you look at palm oil in the state of Johor, many smallholders are relatively old.
37:04They're in their 40s and 50s. And it's not entirely clear if their children want to take over the business.
37:10And that could also, for instance, be true for fishermen, I would imagine.
37:14These were kind of sustainable or sustenance jobs, pardon me, which are slowly going away.
37:21And the next generation, fortunately, has better opportunities.
37:26So it's a very complicated issue is what I wanted to highlight with no easy exit.
37:32Quickly there, you know, so I would I would also add just to add a bit of colour and context for the Malaysian context.
37:40So our largest landowner in the peninsula is Felder.
37:45And it was they own over a million hectares of land, I think, across across the country.
37:50And it was kicked off sometime in the 80s as a poverty alleviation scheme.
37:55And as you said, you you cite like in Johor, where the children are 40s, 40s or 50s.
38:02But smallholders in Felder, the original settlers that were given plots of land as part of this poverty alleviation scheme are now, you know, in a third generation.
38:14So they are no longer here. You're looking at grandchildren.
38:17So they're by law not allowed to sell the land.
38:20So they're given three to five hectares of land.
38:23And they're there, you know, children, maybe they have five and then our grandchildren 15.
38:28So because they can't sell, they have to split that profits between the family members.
38:32And now three generations on, it's not going to be, you know, nobody wants to work on this land.
38:38And so the government, because it's enshrined in law that this piece of land cannot be sold and they cannot grow anything on it other than rubber or palm oil.
38:47It means that they're stuck. So this idea of poverty alleviation, are they keeping people poor because of this initiative?
38:55And in fact, like, I think the only policies that you're introducing are quite it's it's quite band aid solutions.
39:03So a new company will come in. We will run the company for you.
39:07We'll run will because you don't want to work on the land.
39:10We will then do the planting, the harvesting, and then, you know, we'll do a 60 40 split.
39:14So now you're you're splitting 40% or 60% of the profits among 15 grandchildren.
39:19So really, like the big questions around around what you're saying specifically in this part of the world.
39:24Yeah, Dr. Peter, taking this into account, do you see potentially ESG morphing or evolving into something that looks a little bit different in the future?
39:34Oh, that's a good question. But I think it's it basically just shows the complexity.
39:40But what actually the point I was trying to make is that because so the question of harmonization that basically because we have large differences between different ASEAN member states, they because we have these large differences, there is an argument for not having harmonization in particular areas by having local standards that work better for local communities.
40:03That might not always be as strict, but that function in terms of capacity building, keeping certain stakeholders on board and then at the same time they can coexist with international standards in some areas.
40:16So I think especially the financial sector, you see a strong push towards kind of more harmonized standards, also international.
40:23So you've now got the IFRS S1 and S2 reporting guidelines, which seem pretty much universal.
40:29I mean, many ASEAN countries have a version at least of that.
40:34And you also see that standards can coexist, right?
40:37With palm oil, we mentioned there's RSPO, but in Malaysia we have MSPO and ISPO, which are different standards, which these countries feel better meets their needs.
40:46So I think the fragmentation of the market is not always bad, and what we can strive for is more mutual recognition, perhaps, rather than kind of forcing a standard system.
41:01And I think it's also important to recognize the role of the ASEAN secretariat, which acts as a kind of policy coordination and diffusion system.
41:10So although we don't have like the EU where Germany and Bulgaria have identical laws, Indonesia and Malaysia and Thailand and Vietnam, they're all learning from each other.
41:19They often have quite similar frameworks.
41:22So I think in that sense, we probably have the right level of flexibility and harmonization within the region, I would say.
41:30We have just about a couple of minutes left.
41:33I think Dr. Serena, you want to add to that?
41:36Yeah, just very quickly on the RSPO, what they've done really to accommodate the smallholders, whether they're unfailed or not, is the jurisdictional approach.
41:45And in Saba, they've done this really well, tapping on NGOs to go to the ground to help people overcome these, you know, financial and other restrictions that the RSPO sort of imposed on them.
41:56And I think, as Dr. Peter mentioned, that really it is about recognizing that local standards are as good as international standards, which is often the biggest sort of issue here.
42:07And I think one thing that has not been mentioned is the political will.
42:11So we can have all of these standards, we can have, you know, all of these innovations.
42:16But if there is no political will to support a different way of doing things, if there is no political will to not give in to big money, say government funders, to think about other ways of running things, then it's not going to happen.
42:31Right. And every new standard and every new piece of jargon that we use, it's just going to be words.
42:36So we need that political will, we need policies that are looking forward, that are speaking to local people.
42:42But if you don't have that push behind, you don't have a push from the ground so that local voices are heard, it's not going to work.
42:49Everything has to come together.
42:51Yeah.
42:52Sorry, again, I'm depressing.
42:54And perhaps Kaironisa can rescue us from this.
42:58Yeah, just as some parting words, is this an area where we can celebrate difference and variation as opposed to a uniform standardized measurement or benchmark?
43:10I have some bad news.
43:13I think I'm going to start by saying that, you know, as someone who's worked in this sector for so long, I was at COP14, it's what COP30 now, right?
43:21So, you know, I think many of us are like, I find that many of us in this sector, you know, for a long time, we're kind of like knocking on doors saying like, look, we have to sit up and listen, right?
43:30Governments and businesses have to sit up and listen.
43:32I read a really important book last October, which just changed the way I saw my work.
43:38And really, truly, we feel it in here, right?
43:40The book was written by Jem Bandel.
43:42He's famous for his paper, Deep Adaptation, which was behind Extinction Rebellion's demands in the UK.
43:49And the book was called Breaking Together, a freedom-loving response on collapse.
43:54And the book was twofold.
43:56So the first half suggested that there are indicators for collapse that, you know, a lot of us talk about tipping points and we're like, oh, it's in some far off future, 2050.
44:05And so, you know, it suggests that actually we are past tipping point.
44:10It suggests that there's lots of indicators suggesting that we are at the point of quite serious economic and social collapse.
44:18So if the financial system, for example, collapses in the next couple of years, then we're going to see potential for war.
44:26We could see we don't know if the nation state will survive.
44:29So arriving at that, I must say, felt very liberating for me as someone who works in climate change.
44:35Because then that attachment to the outcomes of our work to say that can we make a difference through all this work we're doing,
44:41either on the front lines or through policy or through reforming economic systems, releasing that felt very liberating for me.
44:49And Christina Figuerez, who's the architect of the Paris Agreement, has been bringing climate leaders to a place called Plum Village, which is a Buddhist monastery,
45:01to really let climate leaders sit and sink in and really feel what we feel.
45:08And these anxieties are coming up.
45:10What I think a lot of us at the front lines suspect, which is it's too late, has come to the fore.
45:17And so for me, quite a lot of my work has kind of been shifting towards like, OK, let's look at adaptation.
45:23How can we best build resilience on the ground if mitigation is a longer story?
45:28Am I happy with working on economics and natural capital for the next 35 years of my career if I live that long?
45:35Yes. You know, but am I attached and do I feel attached to the outcomes of it as I as I used to feel?
45:41I don't think so. So I think accepting that perhaps humanity as part of our boom and bust cycle is if human beings could be on the decline, then could we go out with a smile?
45:52Could we go out peacefully and could we go out with as little suffering as possible?
45:57And how do we then hospice modernity?
46:00Yeah.
46:01Like, you know, we can lead to that suffering as possible.
46:05And on that depressing note, we do have to wrap things up now.
46:08But I guess that reality check is definitely necessary.
46:11I mean, we're talking about all components of the ESG.
46:14We do need that reality check.
46:15Unfortunately, that's all the time that we have today.
46:18Really great points.
46:19Very insightful conversation.
46:21Thank you so much to our panel today.
46:23Dr. Peter Kairunisa and Dr. Serena.
46:26A bit, a little bit depressing, but, you know, we can't run away from the reality of what's actually going on out there.
46:32And we hope that, you know, with this conversation, you know, policy makers, decision makers have this in mind about what's actually happening in reality, what's happening on the ground.
46:42And, yeah, we hope that this reality check helps a little bit.
46:47Thank you so much again to all our guests today.
46:49That's all that we have for Dialogue ASEAN 25.
46:51Today with me, Nailah Huda, we'll catch you later.
47:02I'll see you later.
47:14Bye.