Not a waste(d) opportunity

The 17 United Nations’ Sustainable Development Goals (SDGs) were formally adopted by 193 countries in 2015. Since then a yearly assessment tracks the extent of each country’s progress and ranks them accordingly. North European countries such as Sweden, Denmark, and Finland top the 2018 SDG Index while Japan and South Korea are the only two Asian countries within the top 20.

This year’s report, the third of its kind, reveals that no country is on course to achieve all the goals by 2030. The data also suggested that progress towards SDGs 12 to 15 relating to Sustainable Consumption and Production, Climate Action, Life below Water and Life on Land must accelerate significantly to meet the 2030 targets. In particular, the progress on SDG 12 was found to be too slow². In Asia, the index score (see Fig 1.) also shows that far greater efforts are needed to achieve these goals.

Fig 1: Performance of Asian countries on the Global SDG Index²<

Malaysia continues to make progress against some of the SDG goals, especially SDG 1 which refers to the reduction of poverty. At the same time, many other areas need critical attention; Goal 12, for example, highlights that Malaysia’s 69.7% progress rate pales in comparison to some of its South East Asian peers. Currently there is insufficient trend data on SDG 12 but one of the key metrics to measure its progress is the state of recycling and reuse (circular economy).

Recycling rates across the globe fall short of waste production. Waste in the form of food, plastic, electronic or paper is an important consideration of Goal 12 as it directly or indirectly hinders the ability of countries to achieve progress on at least 8 of the 17 SDGs. The same holds true for marine litter. Land-based sources account for up to 80 percent of the world’s marine pollution with 60 to 95 percent of the waste being plastic debris³.

Recycling only alleviates some of the waste. Even the top municipal solid waste (MSW⁴) recyclers only hit a 50%+ recycling rate. Within Asia, South Korea and Singapore stand out (see Fig. 2.). Given this low state of recycling, the slow progress on Goal 12 should not come as a surprise.

In 2016, Malaysia’s recycling rate was 17.5%⁵. This low rate was attributed to the lack of domestic awareness to reduce, reuse and recycle. That aside, the country remains at risk of being a dumping ground for unregulated plastic waste following China’s ban to import 24 kinds of solid waste by end of 2017. Since the ban there has been a marked increase in waste imports; in 2017, Malaysia has seen a 73% jump in imports, Vietnam 62%, while Thailand and Indonesia showed increases of up to 117% and 65% respectively⁶, thereby benefitting recyclers in the region.

At the same time, serious pollution has been reported in Malaysia as illegal plastic recycling plants have mushroomed in the states of Selangor, Penang, Johor and Kedah, many of them having relocated from China. Consequently, the Housing and Local Government Minister has proposed various measures to curb errant recycling firms.

Fig 2: Top 10 MSW Recyclers – Adjusted Recycling Rate⁷

The average Malaysian uses 300 plastic bags a year – almost one every day, bringing the total to 9 billion bags based on a population of 30 million⁸. Malaysia is the 8th biggest producer of mismanaged plastic waste out of a total of 192 coastal countries in the world⁹.

Since 2010, selected states in Malaysia started the “No Plastic Bag Day” with support from most supermarkets, mini markets and retail premises. By 1 Jan 2017, the movement was extended to a ban on plastic bags and polystyrene food containers in Selangor, Penang and the Federal Territories, with other states to follow thereafter. However, its effectiveness was hampered by the fact that not all 14 states followed through strictly, and the “ban” meant that plastic bags were not provided freely, but were made available for 20 sens per bag.

Meanwhile, Corporate Malaysia has been slow to adopt sustainable practices. Unlike the multinationals (Nestle Malaysia, for example, targets to have 100% recyclable or re-useable packaging by 2025 which will force their Malaysian suppliers to innovate and provide sustainable packaging solutions), some other local plastics packaging companies are pushing forward with aggressive expansion plans over the next 2 years, without much innovation on recyclable materials.

In May 2018, the Housing and Local Government Minister did announce plans to introduce a nationwide ban on plastic bags within a year, without detailing the punitive actions for non-compliance. A combination of top down government regulation, penalties, reward and education is probably the most effective way to enforce the 5Rs, i.e. to refuse, reduce, reuse, recycle and remove plastics.

The investment opportunities arising from the move to more sustainable waste management solutions are plentiful; new recycling techniques, innovative solutions for deposit-and-return schemes and alternative materials for coffee cups and plastic bottles are just some of the possibilities, not to mention the financing of these ventures.

Malaysia’s financial industry has also been making efforts to be part of the sustainable movement with the introduction of the First Green Sukuk, that was issued in July 2017. More recently the country scored a landmark in the global sukuk market with the world’s first ever successful issuance of a United Nations’ SDG sukuk by financial institution, HSBC Amanah Malaysia Berhad in October 2018. This issuance is in line with the move by Bank Negara Malaysia to shift the focus of the Islamic Finance industry to integrate environmental and social tenets into financing activities.

The Securities Commission has also offered many incentives to attract green issuers, most notably:

All said, Asia stands to benefit by embracing United Nations’ SDGs sooner than later. Ultimately the region needs to ensure that its future growth, stability and prosperity will not be threatened by growing environmental burdens.