community. This includes providing affordable housing, public amenities, and transportation to prevent economic inequality. Affordable housing supports social, economic, and cultural growth, especially amid challenges like rising rents, gentrification, and population growth. Developers should create affordable housing that is cost-effective, livable, attractive, and fosters diverse communities, enhancing neighborhood cohesion.13 The Asia-Pacific region, with its high population density, faces challenges like climate change, policy issues, and financial constraints. However, the growing demand for sustainable and affordable housing presents opportunities. Singapore sets a strong example of successful implementation, serving as a model for other countries.14
Governance Aspects: Ensuring Transparency and Accountability
The governance aspect of ESG is vital for ensuring that industrial land development projects are managed ethically, transparently, and with accountability. Strong governance practices play a key role in mitigating risks such as corruption, mismanagement, and unethical business conduct, thereby building trust among stakeholders.
In Malaysia, corporate governance is guided by the Malaysian Code on Corporate Governance (MCCG). This code provides guidelines for listed companies, including real estate and land developers, emphasizing clear decision-making, responsible management, and good risk management, especially for ESG issues. Although mainly for public companies, the MCCG also encourages all developers to adopt these practices. Guidance G4.1 notes that many institutional investors consider ESG factors when making investment decisions and use their voting power to ensure that boards and senior management are held accountable for sustainability.15
According to Board Responsibilities under MCCG, effective board leadership and oversight require the integration of sustainability considerations into corporate strategy, governance and decision-making. To build up resilience, boards must adopt a holistic approach to business operations. This includes implementing proactive measures to anticipate and address material ESG risks and opportunities.16
Additionally, the Bursa Malaysia Sustainability Reporting Framework requires publicly listed companies to disclose their ESG activities, risks, and strategies. For industrial land developers, these disclosures ensure that stakeholders, including investors and the public, are well-informed about the company's commitment to ESG practices. The Listing Requirements require the company to include sustainability-related disclosures in their annual reports. The table below provides an overview of the sustainability-related disclosure obligations as prescribed by the Listing Requirements.
Malaysia's i-ESG Framework
Malaysia's new National Industry Environmental, Social, and Governance (i-ESG) framework, officially introduced on 2 October 2023, is a significant step in the nation's commitment to promoting ESG principles. This initiative aligns with global efforts to address environmental, social, and governance challenges and fosters sustainable development among manufacturing companies. The policy framework underscores Malaysia's dedication to reducing greenhouse gas emissions by 45% by 2030 and achieving carbon neutrality by 2050.17 Therefore, all land developers are encouraged to incorporate sustainability criteria into their planned developments to achieve this goal.
Conclusion
The integration of Environmental, Social, and Governance (ESG) principles into industrial land development is essential for ensuring compliance with regulatory frameworks and promoting sustainable growth in Malaysia. The Environmental Impact Assessment (EIA) process, mandated under the Environmental Quality Act 1974, plays a critical role in assessing and mitigating environmental risks associated with industrial land use. Industrial land development, governed by the National Land Code 1965, must adhere to specific usage conditions while integrating ESG principles to align with Malaysia's broader sustainability agenda.
On the social front, the Occupational Safety and Health Act 1994 (OSHA) requires developers to prioritize worker health, safety, and overall well-being, ensuring safe industrial operations. Meanwhile, strong governance practices, as outlined in the Malaysian Code on Corporate Governance (MCCG), emphasize transparency, accountability, and ethical business conduct. Publicly listed companies are explicitly required to comply with the MCCG and Bursa Malaysia's Sustainability Reporting Framework, which mandates ESG disclosures in their annual reports. However, non-listed companies are not legally bound by the MCCG but are encouraged to voluntarily adopt ESG best practices to enhance credibility, attract investors, and meet stakeholder expectations.
Furthermore, the National Industrial Environmental, Social, and Governance (i-ESG) Framework underscores Malaysia's commitment to reducing greenhouse gas emissions and achieving carbon neutrality by 2050. While listed companies face structured reporting obligations, non-listed companies involved in industrial land development are still expected to align with national sustainability policies, particularly when seeking regulatory approvals, funding, or participation in government-driven green initiatives.
As ESG compliance becomes a crucial factor in industrial land development, businesses that integrate these principles will gain a competitive advantage, ensure regulatory adherence, and contribute meaningfully to Malaysia's sustainable future.
Footnotes
1. Survey of Sustainability Reporting 2024: The move to mandatory reporting. (2024, November 13). Retrieved from KPMG website: https://kpmg.com/dk/en/home/insights/2024/11/survey-of-sustainability-reporting-2024.html.
2. National Land Code, Section 117.
3. Dewan Rakyat passes Environmental Quality (Amendment) Bill 2025. (2024, March 25). Retrieved from The Star website: https://www.thestar.com.my/news/nation/2024/03/25/dewan-rakyat-passes-environmental-quality-amendment-bill-2025.
4. New ESG Landscape in Malaysia's Real Estate Through AI Technology. (n.d.). Retrieved from Infra Mobile Digital website: https://inframobiledigital.com/esg-in-malaysia-real-estate/.
5. Sia, M. (2023). The Changing ESG Landscape for Malaysian Industrial Property – myindustrialspecialist.com. Retrieved from myindustrialspecialist.com website: https://myindustrialspecialist.com/changing-esg-malaysian-industral-propert/.
6. Ibid.
7. Section 34A, Environmental Quality Act 1974.
8. Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 2015, Schedule 1 and 2.
9. Green Building Index. (2022). Retrieved from greenbuildingindex website: https://www.greenbuildingindex.org/.
10. Norhanis Diyana Nizarudin, Mohd. Ramzi Mohd. Hussain, & Izawati Tukiman. (2010). The Application of the Green Building Index (GBI) on Sustainable Site Planning and Management for Residential New Construction: Prospects and Future Benefits. SUSTED 2010. Retrieved from https://www.researchgate.net/publication/280730724_The_Application_of_the_Green_Building_Index_GBI_on_Sustainable_Site_Planning_and_Management_for_Residential_New_Construction_Prospects_and_Future_Benefits.
11. Faizal Md Hanafiah. (2016, October 5). The explanatory of the green building index (GBI) rating system: An overview. Retrieved January 26, 2025, from Academia.edu website: https://www.academia.edu/120395112/The_explanatory_of_the_green_building_index_GBI_rating_system_An_overview.
12. Section 15(1), Occupational Safety and Health Act 1994.
13. fc3architecture+design. (2025, January 4). "Across America, cities are grappling with an unprecedented housing crisis. The gap between supply and demand for affordable housing continues to widen, and the need for innovative, cost-effective solutions has never been more urgent. Retrieved from Linkedin.com website: https://www.linkedin.com/pulse/creating-lasting-impact-leading-way-affordable-housing-daxpe/.
14. SUSTAINABLE AND AFFORDABLE HOUSING Spotlighting action from across the World Green Building Council network. (n.d.). Retrieved from https://worldgbc.org/wp-content/uploads/2023/05/WGBC_SAffordable-Housing-Report_FINAL.pdf.
15. Securities Commission Malaysia. (2021, April 28). Malaysian Code on Corporate Governance.
16. Sia, M. (2023). The Changing ESG Landscape for Malaysian Industrial Property – myindustrialspecialist.com. Retrieved from myindustrialspecialist.com website: https://myindustrialspecialist.com/changing-esg-malaysian-industral-propert/.
17. Ministry of Economy. (2023). National Energy Transition Roadmap: Energising the Nation, Powering Our Future. Putrajaya, Malaysia.
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