Company Information
Name: Tenaga Nasional Berhad
Market: Malaysia
Installed capacity (as of 2023): 12.1 GW (Thermal), 4.0 GW (Non-thermal)
Climate-related targets committed:
Long-term:
– Net zero emissions by 2050 and reduction of 100% coal capacity by 2050 (compared to 2020 levels)
Medium-term:
– 35% reduction in Scope 1 emission intensity by 2035 (compared to 2020 level)
– 50% reduction of coal capacity by 2035 (compared to 2020 level)
– 8.3 GW renewable capacity by 2025, with accelerated renewable investment by 2050
Engagement Updates
Last year, Tenaga’s engagement group actively discussed early coal phaseout, gas as a transition fuel, decarbonization technologies like CCUS and ammonia, physical risks, improved transparency, and the company’s climate governance.
On the company’s climate governance, in appointing its first chief sustainability officer and setting up its sustainability division in 2023, Tenaga established the Board Sustainability and Risk Committee. The committee will oversee the group’s sustainability and risk management frameworks and commitments. Over the past two years, ESG-related KPIs have been elevated to Tenaga’s C-suite. In 2023, sustainability linked KPIs were further enhanced with more detail on how they are incorporated into the Board and senior management’s performance evaluation scorecard to align with the firm’s sustainability objectives. Environmental KPIs include renewable energy growth and opportunities, carbon emission rating/score, battery storage (grid), and data center power usage effectiveness.
Tenaga refreshed its ‘Reimagining TNB 2.0’ strategy in 2023 with a focus on three strategic pillars: energy sources, energy vector, and energy usage. Tenaga’s decarbonization plan spans the entire value chain. It includes decarbonizing energy sources, enhancing the transmission grid to support 70% renewable energy by 2050 in Malaysia, and empowering customers with green solutions. While investors continue to push for additional enhancement on the 8.3GW renewable energy target by 2025, Tenaga is on track to achieve it. Forty-eight percent was already achieved as of mid-2023. To support Malaysia’s National Energy Transition Roadmap (NETR) released in 2023, Tenaga has led large-scale renewable energy and clean technology initiatives across floating solar, hydrogen, and ammonia (co-firing) projects.
In efforts to enhance transparency around transition and physical risk, Tenaga has performed a physical climate risk assessment for three types of power generation assets (e.g., coal, gas, and hydropower) and substation assets in Malaysia, against seven physical climate risks: coastal inundation, extreme wind, forest fire, river flooding, soil movement, surface water flooding and heat (dry spells). The company actively collaborates with the Malaysian Government to shape Malaysia’s energy policies, such as the NETR and National Adaptation Plan. The company was a key stakeholder at the AIGCC-Capital Markets Malaysia Energy Transition Roundtable in May 2024.
Investors will continue engagement with Tenaga in the coming year with key engagement objectives involving the 2040 coal exit, the transition from coal to renewable energy, further transparency, developments on climate KPIs in executive remuneration and greater transparency and disclosure on climate.