Bursa Malaysia recently became the first stock exchange in Asia to have its near and long-term emissions reduction targets validated by the Science Based Targets Initiative (SBTi), a leading global standard for corporate climate action.
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However, the stock exchange, which also operates the country’s first voluntary carbon trading platform Bursa Carbon Exchange (BCX), will not count the carbon credits it has been buying towards these targets.
“Indeed, carbon credits are not presently recognised by the SBTi, except for offsetting residual emissions after all possible measures to reduce emissions have been exhausted,” Bursa Malaysia told Eco-Business. “As such, carbon credits are not factored into our greenhouse gas emissions accounting under SBTi-validated targets.”
SBTi has frustrated the business community in recent weeks after rolling back on plans to allow the use of carbon credits to offset Scope 3 emissions, which cover value chain emissions from third parties. The group recently sought public feedback on technical papers which found mixed evidence of the effectiveness of carbon offsets to mitigate Scope 3 emissions.
Bursa Malaysia said that SBTi’s decision would not affect its near-term strategy of continuing to support carbon credit projects via BCX. The exchange is “strongly supportive” of channelling funds into nature conservation projects which it said sequester emissions and contribute towards reforestation, the protection of rural and indigenous communities, as well biodiversity conservation.
“Moving forward, [we] will continue purchasing carbon credits for our Scope 1 and 3 greenhouse gas emissions, putting a price on the emissions that we generate as an organisation while pursuing other ways [to decarbonise] our operations,” Bursa Malaysia said.
Bursa Malaysia’s SBTi-validated targets include a near-term target to reduce absolute Scope 1, 2 and 3 emissions by 50 per cent by 2030, from a base year of 2022. By 2050, it aims to reduce Scope 1, 2 and 3 emissions by 90 per cent.
Bursa Malaysia’s largest source of emissions come from purchased electricity, which falls under Scope 2, followed by fugitive emissions used by its buildings and assets, recorded under Scope 1. Its Scope 3 emissions include those associated with employees working from home, business travel and waste disposal.
According to the company’s 2023 sustainability report, it emitted 8,982.68 tonnes of carbon dioxide and its equivalents (tCO2e) in 2022. It also bought and retired an equivalent amount of carbon credits “for the purpose of offsetting our operational greenhouse gas emissions [in 2022]”, it said.
Bursa Malaysia’s absolute emissions increased to 9,802.46 tCO2e in 2023 but it began using renewable energy certificates (RECs), which were coupled with building energy efficiency initiatives to reduce Scope 2 emissions by 63 per cent, it said.
100 per cent renewables by 2030
In addition to Bursa Malaysia’s emissions reductions target, SBTi has also validated the stock exchange’s target to increase annual active sourcing of renewable electricity to 100 per cent by 2030, from zero per cent in 2022.
The company said that it installed a rooftop solar photovoltaic system in 2023, which became operational on 25 December and currently contributes about 2 per cent to its overall energy mix. “Due to the limited size of our rooftop, we are not able to install a larger capacity system on our premise at this time on the roof,” Bursa Malaysia told Eco-Business. However, it plans to continue purchasing RECs for its 2023 and 2024 energy emissions via BCX, as well as through a recent 21-year agreement with Malaysian solar power producer Solarvest Holdings to buy RECs.
“We are exploring other available mechanisms [to secure renewable electricity] such as green energy tariffs and third-party access mechanism like the Corporate Renewable Energy Supply Scheme (CRESS),” said the company. The Malaysian government has been finalising the details of CRESS, a scheme which would allow businesses to buy renewables directly from power producers instead of relying on the national electricity grid.
Bursa Malaysia first announced its commitment to net zero emissions by 2050 in September 2021. It has since undertaken an energy audit and developed a comprehensive greenhouse gas emissions inventory, which covers all 15 categories under Scope 3, it said. The categories include emissions from purchased goods and services, waste generated in operations, business travel and employee commuting, among others.
Internally, Bursa Malaysia has also been building capacity on climate and environmental, social and governance (ESG) matters for its directors and employees, as well as issued internal guides on reducing emissions, waste disposal and recycling.
