Sustainability – Pengurusan Aset Air Berhad

Overview

As a special purpose entity and as a Government-Linked Company whose one of its objectives is to bridge the gap between the public and private sectors, PAAB’s interests and values primarily circle around balancing social obligation to fund, develop, and deliver high quality water infrastructure as well as fiduciary duties to the investors of PAAB and its subsidiaries (“PAAB Group” or “the Group”).

The Group’s moral compass to be a responsible organisation guides the Group towards conscious effort in supporting the aspiration by the Federal Government to materialise the international agenda for development that meets the needs of the present without compromising the ability of future generations to meet their own needs (“sustainable development” or “sustainability”).

Governance and Management Approach PAAB Sustainability Framework

Governance and Management Approach

Governance

Management Approach

Governance

PAAB has a dedicated Sustainability Steering Committee to steer, coordinate, track, and evaluate progress of implementation of the Group’s sustainability strategy. This committee comprises various functions in the Company and is chaired by the Head of Strategy and Transformation Office. The Sustainability Steering Committee reports to the Chief Executive Officer.

Sustainability Committee, a committee comprising members of the Board of Directors of PAAB (“the Board”), supports the Board in providing oversight in sustainability agenda for the Group in respect of planning, implementation, evaluation, communication, as well as disclosure of policy, framework, strategy, targets, and practices towards the goals of the 2030 Agenda for Sustainable Development (“Sustainable Development Goals” or “SDG”) and climate-related goals as set forth by the United Nations. The Sustainability Committee convenes its meeting on a quarterly basis.

The Board is the highest approving authority and is ultimately responsible in setting the direction and providing oversight for the Group in relation to sustainability.

Management Approach

Sustainability is a collective responsibility of everyone in PAAB Group. The Sustainability Steering Committee comprises all functions within the Group, i.e., operations, finance, and corporate, with representation from the management office to facilitate discharging of the committee’s roles and responsibilities per the terms of reference for the committee.

For example, the risk management function ensures all risks associated with sustainable development and climate change are identified and managed; the tender function works with contractors and suppliers to embed sustainability in the supply chain; whereas the treasury function ensures availability of funding to finance development of infrastructure for the national water services industry. The sustainability officer is responsible for internal coordination of everything related to sustainability. The Sustainability Steering Committee is the frontline body in development and execution of the Group’s overall sustainability strategy as well as monitoring progress of the strategy.

At the strategic level, a medium-term sustainability plan is developed following engagement with internal and external stakeholders. This engagement aims to understand the impacts of PAAB Group’s operation and activities, expectations of the stakeholders, the economic, environmental, and social risks and opportunities, and how the Group can contribute towards sustainable development and the national climate aspiration based on the context of the internal and external environment within which the Group operates. The medium-term sustainability plan outlines specific medium term objectives which are measured by sustainability performance indicators, with initiatives planned to be undertaken towards meeting the objectives.

At the tactical and operational level, the strategy outlined in the medium-term sustainability plan is translated into short-term targets which are included in the annual performance planning of the relevant business functions, either corporate, divisions, departments as well as the employees.

Monitoring of implementation of the sustainability strategy is carried out by the Sustainability Steering Committee and subsequently reported to the Chief Executive Officer.

The Group has tailored its management approach to sustainability to suit the context and mandate of the Group in the national water services industry. The Board believes this approach to be the best fit for the Group now, and is expected to continue to be so in the foreseeable future.

PAAB Sustainability Framework

PAAB has developed a framework for sustainability for the Group which aims to set out and provide clarity on the overarching principles of the Group towards sustainability to guide development of long- term, medium-term, and short-term sustainability strategy for the Group.

This Framework highlights the Group’s aspiration in sustainability as guided by the 2030 Agenda for Sustainable Development and Paris Agreement. The Framework identifies key result areas from the Group’s sustainability strategy which are underpinned by the pillars and enablers for sustainability within the Group.

Aspiration

Guidance

Key Result Areas

Pillars

Enablers

Aspiration

As the largest owner and developer of infrastructure for water services in Malaysia, the Group has a high degree of impact towards sustainable development. Continuous availability of water is one of the pre-requisites to stimulate economic development while the government ensures the basic human right for water is protected.

The Group’s aspiration in sustainability, i.e., catalysing development in the water sector that meets the needs of the present without compromising the ability of future generations to meet their own needs, is congruent with the 2030 Agenda for Sustainable Development.

Guidance

The Group, in developing its sustainability strategy, is guided by the 2030 Agenda for Sustainable Development which contains the SDGs, as well as the Paris Agreement, a legally-binding international treaty on climate change in which Malaysia is a party.

These are used to identify the impacts of the Group’s operation and activities towards sustainable development from economic, environment, and social perspectives. These impacts can be actual or potential, short-term or long-term, direct or indirect, intended or unintended, and reversible or irreversible.

Notwithstanding the above, the Group may benchmark itself against the sustainability principles and strategies of other local and international organisations.

Key Result Areas

The group has identified three (3) priority areas to translate the Group’s aspiration in sustainability and the guidance which the Group adopts into a broad definition of progress. These Key Result Areas (“KRAs”) are moulded from the impacts of the Group’s operation and activities and are aligned to the pillars of sustainability, i.e., Economy, Environment, and Social, as identified by the United Nations.

Pillars

The Group’s approach to sustainability is premised on the three (3) pillars of sustainability, i.e., economy, environment, and social. These pillars are central in scoping the sustainability KRAs of the Group, and demonstrate the Group’s commitment to be outward-looking in pursuit of sustainability agenda as a responsible corporate citizen.

Enablers

The following enablers have been identified as critical factors enabling successful sustainability agenda in the Group:

Leadership Commitment
Securing a future wherein humans and nature continue to co-exist requires bold, transformative actions that are impactful, meaningful, and robust to break and remake old commitments and norms in the business and water sector landscape. This may entail the leadership publicly committing to new goals, fundamentally shifting performance measures, and realigning business priorities.
Passionate Workforce
Driving the agenda for sustainable development within an organisation is playing for the long game. A workforce that cares very deeply about sustainable development and seeks to make a difference in the world is vital in facing the surmounting challenge towards sustainable development.
Resource Availability
Availability of various resources, e.g., financial resources, human resources, physical resources, and all other necessary goods or services is crucial in ensuring these resources are accessible and ready to be utilised whenever needed for the purpose of implementing the sustainability strategies of the Group. This involves both physical availability as well as the capability of the Group to allocate and utilise these resources effectively.
Ethical Business Conduct
Business conduct and practices that are aligned to sustainable development are increasingly considered as ethical, i.e., acceptable forms of behaviour. This requires the Group to re-calibrate its stands on morality — the guiding principles and organisational values that influence its notion of right and wrong — which guides the Group’s everyday choices and actions.
Technology and Innovation
Technological change and innovation in renewable and other green technologies in water infrastructure as well as other aspects of the Group’s operation and activities are intrinsic in delivering a sustainable development. These are essential in conservation of the environment by protecting it through responsible use of natural resources, and preservation of the environment by protecting it from harmful human activities.
Stakeholder Engagement
Engaging with stakeholders whose interests are affected or could be affected by the Group’s operation and activities helps the Group identify and manage its negative and positive impacts. These stakeholders may not always have a direct relationship with the Group, and may be identified based on individuals or groups whose interests have to be taken into account in connection with specific activities of the Group.