In this episode of “The Shift with Freda Liu”, we explore the growing importance of sustainability in today’s business landscape. Margie Ong, Founder & CEO of Thoughts In Gear, a sustainability transformation consultancy, joins the conversation to illuminate the path for corporates, non-profit organizations, and offers assistance to governmental bodies. The discussion delves into the evolving landscape of sustainability, the challenges and opportunities companies face in becoming ESG-ready, and practical steps for implementing successful practices. Measurement, supply chain engagement, navigating regulations, and achieving Malaysia’s ambitious goal of carbon neutrality by 2050 are some of the key areas you’ll hear about. Join us as Freda Liu and Margie Ong unpack the complexities and possibilities of creating a sustainable future.  

This is a transcript of the interview, slightly edited for clarity. 

Freda Liu (Host) 

This is The Shift with Freda Liu. Hello, and what’s The Shift about? Whether it’s seismic or small, there’s a need to make a shift towards sustainability. 

And how are individuals and organizations doing this? It’s the collective effort of everyone. Now, Thoughts In Gear is an organization that provides transformation solutions for the sustainability of corporations, governments, and non-profit organizations. 

Their simple mythology towards effective transformation is no plan, do tell, trademark. I’m here with the CEO, Margie Ong. Hi, Margie. 

Margie Ong (Founder & CEO of Thoughts In Gear) 

Hi, Freda, how are you?  

Freda Liu  

Thanks for being here. I love the work that you do and how you explain things so simply, right? 

And you started Thoughts In Gear 10 years ago. And first of all, why did you move in this direction? And I can imagine, what were the conversations then and what are the conversations now. 

Margie Ong  

Oh my goodness. And you’re reminding me it’s 10 years ago, a long time ago. But we started off with Michael Porter’s concept of creating shared value. And that concept was based on, again, a very fundamental, simple concept of doing well and doing good. 

And on that premise, we realized that, hey, a light bulb went off. And we thought the corporate sector has so much to gain from this, so much to gain from ensuring that whatever that they are producing and putting out into the world, in fact, does fulfil the need and does, in fact, bring some good to the world. Now, to your question of what the landscape was like back then. 

So sustainability and ESG, now we know that in the West, it was right. But here in Asia, there was absolutely no conversation at that point in time. And to be honest, even then when we started, we rarely used those terms. 

Fast forward to today, oh my goodness, even in the last six months, 12 months, we’ve seen that just blossom. And as you know, it’s very much needed in the world today. So I’m just so happy that the conversation has reached some of the heights that it has, although there’s a lot more. 

And shows like this are what’s going to help move it along. 

Freda Liu  

So a lot of the conversations right now is like, I need to get on this, but I’m not sure what I need to do pretty much that, right? Not so much like I’m at this stage, where do I take it further? So we’re still very at our infancy almost in Malaysia. 

Now, okay. So public listed companies inevitably have to, right? If not already, have to move in this direction. 

So what determines how successful and fast a company can be ESG ready? 

Margie Ong  

Okay, that’s an excellent question. And when you say public listed companies have to, that is also very good steps that have been taken by some of our regulators. And yes, they do have to, we can go into the details later about how they have to. 

But to answer your question of how fast and how quickly, what determines how quickly they can get on board? It really is at the very, very foundation of it, the understanding and embracing the concept. So really knowing that ESG and sustainability, in fact, first of all, I don’t need them to come altruistically and say that, I’ll do this for the good of the planet. 

I need them to know that the risks and the opportunities are very, very real. And so when they come on board, they’re doing it, yes, for the benefit of mankind, but also very much to also protect the interests of their own businesses as well. 

Freda Liu  

Right, so a bit of the carrot, a bit of the stick.  

Margie Ong  

Exactly.  

Freda Liu 

Okay, and I’m looking at this whole process, right? 

I mean, you’ve got a concept, is measurement and tracking one of the more difficult aspects of this? 

Margie Ong  

It is and it isn’t. So it is when you don’t know what to measure and you don’t know what to track. However, and I say it isn’t because there are many, many standards out there. 

And if you ask a lot of people, there are too many standards out there that actually show you what to measure. And so that can get extremely confusing. There’s an alphabet soup of standards out there. 

And in fact, the standards tend to all want to achieve the same goal, but with little variations between them, which makes it very complex. So for example, at the moment, if we’re talking in the context of Malaysia and Asia, some of the more relevant ones, of course, the very popular GRI, SASB is not as popular here, but also gaining ground. And in terms of like in Malaysia, our evaluators would be FTSE4Good. 

In Singapore, it would be the DJSI, for example. And of course, up and coming, the fastest growing standard out there at the moment, TCFD as well. Having said that, ideally, all of it will come together around June this year, when the ISSB releases this aggregated standard with all these parties around the table that can now say, okay, let’s make it a little bit easier. 

Freda Liu  

Right? Because it’s, you know, like how we have ISO, right? And ISO is sort of like globally recognized as the standards, right? 

So right now it’s like, who do I follow even, right? What’s the right? You know, Margie, it also gets complicated when we take supply chains into account for scope three emissions, right? 

And social implications. How will companies begin to get their head around this? And maybe very quickly, scope one, scope two, scope three, what does it mean? 

Margie Ong  

Yeah, I think you touched on one of the most difficult topics today. So the supply chain is vast, it’s diverse, it’s deep, it’s global. And so to answer your question, scope one, scope two, scope three. 

So scope one is about direct emissions within the company. Scope two is indirect, mainly through purchase of electricity, et cetera. And scope three is where supply chains come into play. 

So both upstream and downstream, whereby companies are now expected to take responsibility for both their supplier emissions as well as their products onwards from where they are. So that becomes complicated because of the level of transparency and visibility of data as well within their supply chain.  

So you can imagine that if they have suppliers halfway around the world, like in Asia, like in Malaysia, Singapore, Vietnam, Thailand, et cetera, how will they begin to ask for the data and begin receiving the data and knowing exactly what’s going on within those factories and companies in order for them now to take responsibility for both their environmental impact, like scope three emissions, as well as their social impact, like for example, labour standards, working conditions, et cetera. 

Freda Liu  

Right. And that’s where, I guess, when we have those standards in place, you need to get the certification to a certain extent so then they know. But as much as possible, unless they come to on the ground and spot check. But this is easy, right? 

Not easy, but scope one, scope two, sort of within your control, scope three, I now have to get other people involved as well. Now, how have you seen more successful countries in ESG implementation get their suppliers and customers on board? Do you have any stories to share? 

Margie Ong  

Oh, we have, mainly we look at the moment to some of the global players because they obviously have a lot more at stake. They’re also under the microscope a lot of times. So like, for example, a company like IKEA, they have a supplier development programme called IWAY and that undermines their entire code of conduct, supplier code of conduct. 

So in there, they specify very clearly what they need their suppliers to be compliant with. Now, a lot of times, many companies might not be at the point where they are ready to state that they will not engage with suppliers, for example, who don’t meet those standards. So there’s always a gradual journey. 

Also, there are also economic implications of every decision that’s taken within the supply chain, right? So oftentimes, the way we would always encourage the suppliers to really begin to adopt as well as the large companies to begin to sort of impose these requirements or encourage these developments is around, first and foremost, profiling their suppliers and their supply chain, knowing exactly where their suppliers are at what level of adoption, as well as, sorry to say, but the importance of that supplier to them. 

Then they’ll develop a programme whereby they can engage with these suppliers at different tiers and different levels of engagement. And then finally, as they begin to develop them, increase their understanding, increase their adoption, they can begin to measure, track, and eventually place some policies and requirements onto them. 

Freda Liu  

Right, trust the Scandinavians, right? Okay. Now, concepts, the whole idea on concepts, right? 

People are usually confused by SDGs and ESG and its relation to sustainability, right? How can these work in tandem for corporations and individuals to understand? 

Margie Ong  

Okay, excellent question. And I always wait for the question of the different definitions because it’s extremely important. And I don’t oftentimes use the terminology sustainability and ESG interchangeably, although when you read in articles, et cetera, you see that they are. 

So sustainability oftentimes talks about the entire concept, usually four pillars, which is economic, environmental, social, and governance of a company. ESG is a terminology that’s used largely in the investor world to talk about non-financial disclosures. So the E, the S, and the G, because they have the financial disclosures down pat with their due diligence, right? 

So to answer your question on the SDGs and ESG, so SDGs is, it’s a vague standard that if you, you know, you ask different people, they have different opinions about it, but never before, other than MDGs before this, have we had more than 180 countries saying, this is what we need for the world and agreeing on it, right? So even though the standards are relatively loosely and vaguely very much focused on the development world, we can very much translate it into the corporate sector and ensure that we are aligned. And all the standards that we spoke about earlier as well are all very much aligned towards achieving the SDGs as well. 

Freda Liu  

Right, okay, so when you have that, that should help with sustainability, right? Okay, now I know with your, you have a very simple formula. It sounds so easy, right? 

No plan, do tell, right? Sounds that simple. Sounds simple, right? 

What exactly does it entail? And yeah, what exactly does it entail?  

Margie Ong  

Yeah, no, and that’s, you know, I’m so glad you said it sounds easy. That’s exactly what we’re going for. It has to be easy as well. Now, you know, without oversimplifying the very complex nature of sustainability within our corporation, we’ve divided into four main phases, no plan, do tell. 

So the new is really about capacity building, the understanding all the way from your board of directors, senior management, to the employees at large. And, you know, if you ask some of the companies that have progressed along the way, they, you know, even down to, you know, every staff, the security guards, et cetera, everyone knows some level of understanding sustainability. In no as well, it’s very much about baselining. 

So understanding where you are as an organization, understanding how much you have done and how much you still need to do. Plan is about the strategy and the roadmap and the framework ahead, knowing where you want to go, how far, how fast, and setting targets to get there. Do is the most important part, the implementation, which oftentimes is where a lot of people fall down, right? 

Freda Liu  

So it’s never to be seen again.  

Margie Ong  

Never to be seen again. I have a beautiful strategy and now what? 

And so it’s really about, you know, putting the rubber to the road and ensuring that those initiatives that have solid business cases behind them actually get implemented. And then finally the tell, and we put tell at the end because we often say, do the work and then talk about it. And so when you tell, you know, there are many, especially in the Asian culture, they are very conservative about telling. 

So what we always encourage is tell with confidence, but with data to justify because you inspire the market. So as you tell your story, as I am quoting folks like Ikea, et cetera, here, you inspire the rest of the market to also follow suit as well. 

Freda Liu 

Right, and even as you’re doing, you know, where you’re falling short, where we’re learning from this process, people want to hear their story and use you as well, use your tribe. 

Margie Ong  

Absolutely, and Freda, you know, you’ve actually hit the nail on the head when it comes to the maturity of the market that is reading because oftentimes, as you know, from previous years, reports are usually about what I did really well, right, and achievements. Now there’s a very, very strong term in sustainability reporting called balance reporting. And that talks about, yes, talk about your achievements for sure, but also talk about your challenges, exactly what you just mentioned, right? 

So talk about your challenges, talk about how you overcame them. Of course, be smart, talk about your mitigating actions and so on and so forth. But really, you know, it’s about open communication. 

It’s about being transparent. And that also will hopefully enable you to shy away a little bit from that whole concept of brainwashing because that’s really, and brainwashing can be either intentional or it can also be accidental. Folks that feel that they don’t want to disclose as much because they haven’t done as well, do also stand the risk of falling into the bucket of brainwashing. 

Freda Liu  

Okay. I’m going to share a story and whether this gets edited out or not. But no, I won’t mention the name of the company, but it was a hotel chain, right? And they want to be involved, I know they’re moving towards ESG as well. 

And they were saying they’re trying to remove all plastic bottles from rooms and everything. So I went to this particular hotel, say, how come this is not removed yet? Of course, close to deadline, not yet deadline. 

I said, the challenge and he was just telling me that this hotel chain in the Western parts, it’s not, you know, they’re more controlled. Whereas in the Asian part, a lot of it’s owner operated, right? I mean, it’s owned by the hotel. 

So it depends on the owner whether they want to make the investment. So these are things like, oh, you know what I mean? I’m not saying it’s right or wrong, but this is the challenge that they have in this part of the world, right? 

And if people understand that, we, you know, we give a little bit of grace when we understand it, right? Now, okay. 

Margie Ong  

That’s a really good point, but also now in that exact story, they now have a little bit of flexibility, whether they want to follow or they don’t want to follow. Soon regulations will catch up. 

Freda Liu  

Yes. 

And that’s where they have no choice. Yes. And that’s why we always encourage companies, put that sense of urgency because before you know it, you will be required to do it. 

And if your peers have all been on board for a number of years and you are now coming on board, what does that say about your competitiveness in this new market today, right? 

Freda Liu  

Okay. Now, have you seen companies come on board at the scale we need to? What’s stopping them? 

And what should they immediately get started on? Immediately. 

Margie Ong  

Immediately. So the quick answer, you know, I’ll talk about kind of Southeast Asia in general. And I think that we always come back to kind of a few front runners, but generally no, not at the scale. I think that we need to, all the way from the company adopting it themselves, all the way through their supply chain as well. 

So we’ve not yet been able to quote some very good examples. What do they need to do immediately? I think immediately ensure that you know where your company’s at. 

So I always say baseline, baseline, baseline first before you start. So, you know, and I would always encourage companies to say, you’re not doing nothing because I come from a manufacturing background. And so we’ve been doing lean manufacturing, Six Sigma, et cetera, for decades now. 

And all that have sustainability concepts ingrained within. So find out and baseline what your company is doing across the board, ensure that that’s captured, baseline your emissions, baseline your social standards, et cetera. Now, you know where you’re starting from. 

Then have a look at the standards and see where should I be? Identify that gap, run that gap analysis and then very strategically pick out areas. So you can always divide it into low hanging fruits and then some longer term initiatives, right? 

And ensure that that becomes a part of your company’s strategy and that it doesn’t sit separately as a sustainability strategy that someone looks at, you know, when they have a little bit more time.  

Freda Liu  

Okay. Moving forward, right? We always have a call to action as well, right? Malaysia has pledged to be carbon neutral by 2050. 

Have you seen a concrete plan to make this happen? 

Margie Ong  

Well, I can only comment from a corporate sustainability perspective. And I must say, I’ve never been a fan of regulation, but for all intents and purposes, this is absolutely needed now because of the urgency by which, and you know, we look at the recent IBCC report, we have no time. And so I’m a huge fan of our regulators at this point in time. 

And our three regulators for the corporate sector at the moment are in fact taking steps. So for example, Bank Negara last year has released multiple guidances, including the CCPT, which is a taxonomy, including an application guide for TCFD, which helps companies look at their risks and opportunities as well. Our Bursa Malaysia that we spoke about earlier. 

So they’ve got also two initiatives that are very, very encouraging of the market. So one is they’ve amended their listing requirements. They already needed you to publish a sustainability report. 

They’ve now amended it to include guidelines on TCFD. Plus by the end of this year, all main market companies will be judged on the FTSE4Good rating as well. And by the end of next year, all ACE market companies as well. 

So that will also move the conversation along. Now, Securities Commission, our third regulator, is also very on board. Last year they had, and in fact, years before, they had released the SRI roadmap, the MCCG had amended their corporate governance guidelines, and last year they released the taxonomy as well. 

Now, by the end of this year, I’m very, very excited to share that they will be, under Capital Markets Malaysia, they will be releasing an SME ESG Disclosure Guide, a simplified disclosure guide, which is trying to take care of our supply chain, but also viewing us as a supply chain to the world as well. How do we communicate where we’re at to the world? And what does this simplified guide look like? 

What are some of the terminologies we need to take on board and yet make easy? So I’m really hoping that together we’ll come up with a really good guide for the market at large. 

Freda Liu  

Because as we play on the global stage, right? Okay, so the key areas that we need to activate to make this happen then, if you’re talking about, I guess, the SMEs. 

Margie Ong  

So it’s the market in general. I think, you know, in terms of the public listed capital markets, we look at the large cap, which are already moving along at whichever speed almost all of them have in some form adopted sustainability. Mid and small cap are still, you know, in the midst of finding out what they need to do first. 

You know, some of what we’ve been talking about today. Then we come to the leap in the SME market, which makes up a large percentage of our local market, as well as the global supply chain. And this is where we say, you know, get on board again, first with the understanding, then the baselining, and then very much and quickly planning out your risk, your opportunities, what you want to do first, and then very quickly getting it into a format that can be understood in a report as well. 

Freda Liu  

All right. So, first of all, you’ve got to know, know, plan, do, and tell, right? But maybe at this point, just know first. 

Margie Ong  

Right.  

Freda Liu  

Thanks for being with me today and sharing this. Of course, I’ve been with Margie Ong from Thoughts In Gear, and you’ve been watching The Shift. 

Looking for the full interview? Watch or listen to it here: Youtube or Spotify