1. Core Principle: Intent Is Not Impact
Projected carbon emission data represents strategic intent, not actual environmental performance. While projections are a legitimate component of ESG planning and transition pathways, they are inherently dependent on assumptions, modelling choices, and future actions. They do not constitute empirical evidence.
Actual ESG credibility rests on measured, verifiable, and repeatable emissions data.
In Malaysia, this distinction is especially clear due to the mandatory requirement for Continuous Emission Monitoring Systems (CEMS) in selected industries. CEMS involves physical devices installed at emission stacks or chimneys, generating continuous, real-time, tamper-resistant emissions data, accessible simultaneously by regulators and operators. This data reflects what is actually emitted, not what is expected or promised.
Where such measured data exists, ESG disclosures that elevate projections to the level of performance risk substituting aspiration for accountability.
2. Mapping to GHG Protocol and ISO 14064
a) GHG Protocol (Corporate Accounting and Reporting Standard)
Relevant principles and requirements:
Relevance and Faithful Representation Emissions data must reflect the entity’s actual GHG profile, not hypothetical future states.
Accuracy Material errors must be reduced as far as practicable. Continuous measurement (e.g. CEMS) clearly ranks higher than estimates or generic emission factors.
Consistency & Transparency Changes in methodology and use of projections must be clearly disclosed and distinguished from historical data.
Critical alignment point: GHG Protocol allows estimation where direct measurement is not feasible. However, where direct measurement exists (such as CEMS), reliance on projections without reconciliation violates the spirit of faithful representation, even if not explicitly prohibited.
b) ISO 14064-1 (Organisation-Level Quantification and Reporting)
Key clauses:
Clause 5 – GHG Quantification Requires identification and quantification of GHG emissions using methodologies that ensure accuracy and completeness.
Clause 6 – GHG Reporting Requires transparent disclosure of:
Clause 7 – Verification (where applied) Emphasises traceability and auditability of emissions data.
Critical alignment point: Where CEMS data exists:
It qualifies as primary data
It has higher verifiability and traceability than modelled projections Presenting projected reductions without explicit linkage to measured CEMS baselines weakens ISO 14064 conformity, even if verification is voluntary.
3. "Stock Exchange Centre" : ESG Disclosure: Structural Weakness
The "Stock Exchange Centre"’s sustainability reporting framework emphasises:
Transparency
Comparability
Decision-useful information
However, current disclosure practices reveal three structural gaps:
No mandatory hierarchy of data quality Companies may disclose projections alongside actual data without clearly prioritising measured emissions.
No explicit requirement to reconcile ESG emissions data with regulated CEMS data ESG disclosures and environmental compliance reporting operate in parallel, not in integration.
Limited enforcement differentiation between “targets”, “estimates”, and “measured performance” This allows projections to visually dominate ESG narratives.
As a result, investors may unknowingly rely on forward-looking claims while actual emissions trends already measured by regulators remain under-emphasised.
4. Malaysia-Specific Enforcement and Disclosure Gaps
Despite strong technical regulation, several gaps persist:
Regulatory–ESG Disconnect Enforcement compliance; ESG reporting is largely self-curated. There is no systematic requirement to embed CEMS datasets into sustainability reports.
Disclosure Selectivity Exceedances, fluctuations, or non-improving trends in CEMS data are rarely reflected proportionately in ESG disclosures.
Verification Asymmetry Environmental compliance data is regulator-verified, while ESG emissions narratives often rely on internal modelling with limited external assurance.
This creates a paradox:
The most reliable emissions data in Malaysia is often the least visible in ESG communication.
5. Case-Based Examples (Anonymised)
Case Example 1: Energy-Intensive Facility
A large industrial facility publicly reports a “planned 35% carbon reduction by 2030” based on:
Anticipated fuel switching
Efficiency upgrades
Renewable offsets
However:
Five years of CEMS data show flat or marginally increasing stack emissions
ESG disclosures summarise emissions using annualised estimates
No reconciliation is provided between CEMS trends and projected reductions
Outcome: Projections dominate perception, while measured emissions tell a different story. This is not non-compliance, but it is misleading ESG framing.
Case Example 2: Multi-Plant Operator
A company operates several regulated facilities, each with CEMS installed. In ESG disclosures:
Emissions are aggregated at group level
Year-to-year reductions are attributed to “operational optimisation”
Individual plant-level CEMS variability is not disclosed
Outcome: Aggregation obscures site-specific performance, diluting accountability and masking underperforming assets.
REMEMBER
Where measured, regulator-observable emissions data exists, ESG reporting that relies primarily on projected reductions without explicit reconciliation crosses the line from strategic communication into structural greenwashing.
This is not about malicious intent. It is about data hierarchy discipline.
Measured emissions data such as mandated CEMS must form the foundation of ESG environmental disclosures. Projections should support strategy, not replace evidence. Without this hierarchy, ESG risks becoming a language of reassurance rather than a mechanism for climate accountability.
Here's a summary :
Below I integrate sample data, calculations, and interpretation so it aligns cleanly with:
GHG Protocol
ISO 14064
CEMS reality
"Stock Exchange Centre's" ESG disclosures
Your climate-change article narrative
Everything below is illustrative but technically realistic.
1. Sample Data Set (Illustrative, Anonymised)
Scenario: An energy-intensive industrial facility in Malaysia with mandated CEMS.
Annual CO₂ Emissions (tonnes)
Key observation:
CEMS data shows flat to slightly increasing emissions
ESG projections show a smooth, continuous decline
This divergence is the core greenwashing risk.
2. Sample Calculation (GHG Protocol / ISO 14064–Aligned)
A. Actual Emissions (CEMS-based)
Typical CEMS calculation logic:
Example (simplified):
Average CO₂ concentration = 9.5%
Flue gas flow = 120,000 Nm³/hr
Operating hours = 8,000 hr/year
Conversion factor applied per ISO / Environmental method
Result: ~532,000 tonnes CO₂ (2024) This value is:
Site-specific
Continuous
Regulator-observable
Verifiable
B. ESG Projected Reduction (Model-Based)
Typical ESG projection logic:
Baseline (2020):
Assumptions:
2% efficiency improvement per year
10% fuel switching by 2023
No production increase
Projected 2024:
Critical issue: These reductions are assumed, not measured.
3. Graph Interpretation (What the Chart Shows)
The chart you see illustrates:
Upper line: Measured emissions from CEMS → Reflects real operations, production variability, and combustion reality
Lower line: ESG projected emissions → Reflects modelling assumptions, not operational truth
Why this matters:
ESG readers may intuitively trust the downward trend
Actual emissions reality moves in the opposite direction
Without reconciliation, the projection becomes implied performance
4. Standards-Based Analysis
GHG Protocol
Allows estimation only where direct measurement is not feasible BUT Does not support replacing measured data with projections
Issue shown by data: Measured Scope 1 emissions exist (CEMS), yet projections dominate disclosure → breach of faithful representation principle
ISO 14064-1
Relevant failures illustrated:
Clause 6.4 – Transparency of data sources
Clause 6.5 – Disclosure of assumptions and uncertainties
If ESG reports show only the projected line:
Primary data (CEMS) is suppressed
Secondary data (models) is elevated = Methodological imbalance
5. "Stock Exchange Centre's" ESG Disclosure Implication
From an investor’s perspective:
ESG report suggests ~19% reduction (520k → 420k)
Actual regulated data shows ~2% increase (520k → 532k)
This creates:
Mispricing of transition risk
False confidence in decarbonisation progress
Reputational exposure once discrepancies surface
6. Case-Based Critique (Without Naming Companies)
Case Pattern Observed in Malaysia
“Companies comply with using CEMS, but communicate ESG using projections.”
This results in:
Compliance data staying with regulators
Optimistic narratives going to investors
Two parallel truths, never reconciled
This is structural greenwashing, not necessarily intentional deception.
7. How This Should Be Reported (Correct Practice)
A compliant ESG disclosure would show:
Measured CEMS emissions (primary line)
Projected pathway (dashed or secondary line)
Explicit reconciliation statement, e.g.:
“Despite projected reductions, actual emissions have remained flat due to increased throughput and operational constraints. Transition measures have not yet translated into measurable reductions.”
That single paragraph restores ESG credibility.
SO
When real-time, regulator-observed CEMS data shows rising or stagnant emissions, ESG projections of decline, if presented without reconciliation do not represent transition progress, but narrative optimisation.
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