I Read Through Tenaga Nasional’s 150+ page Sustainability and Governance Statement So that You Don’t Have to — Here are the 5 Key Takeaways.

Ho Su Wei
8 min readApr 30


Disclaimer: This is for education purposes. I take no responsibility for anyone’s investment decisions regarding this article.

Tenaga Nasional Berhad is Malaysia’s electrical utility company that provides electricity to all Malaysian states (except Sarawak). I have been writing about financial statements and annual reports, but this is probably the first time I am writing about the Environmental, Social, and Governance (ESG) component of the company.

ESG is … a complicated topic. Many have talked and written about it, but for the regular person on the street, ESG is often synonymous to “Oh, what did the company do for the environment?”. Environmental sustainability is certainly an important aspect of ESG but it includes also the social and governance aspect of the company. Before this, companies normally don’t disclose the environmental and social aspects of the company in detail. Most of them just lump them into the corporate social responsibility section and call it a day.

In recent years, as these things become front and center in investors’ minds, companies are beginning to disclose more and more information pertaining to the impact of their operations on the environment and society. What was called board management in previous annual reports is now being included as part of the ESG initiative also as it increases the responsibilities of the board and company on the responsibilities they have to the environment and society in general.

This couldn’t be more important for a company such as Tenaga Nasional Berhad. It is a utility company that generates electricity from fossil fuels mainly, and the sustainability of its operations is beginning to be questioned more frequently. However, the ESG is almost 150 pages long in the annual report. You probably don’t have the time to sieve through all this information, hence we actually read through the whole thing and these are the 5 things that we think you should know about TNB.

#1: TNB is Aiming to Cut Coal from its Fuel Sources by 2050

That’s right. TNB is aiming to cut its dependence on coal completely by 2050 in accordance with its target to reach net zero carbon emissions. If you don’t know, most of the electricity being generated by TNB still comes from coal and natural gas. Coal encompasses about 55.9% of TNB’s fuel generation mix, followed by natural gas at 37.2%. Renewable energy, including hydropower, solar, and others, takes up about 7%.

TNB plans to reduce coal dependence by 14% in 2030 and a further 50% by 2035. It plans to do so by retiring existing coal plants earlier than its Power Purchase Agreements (PPA) expiration. On that front, TNB has already been conducting feasibility studies of coal plants being co-firing with ammonia and biomass for the Jimah East Power plant, Kapar Energy Ventures project, and Jamananjung plant.

However, there is one thing worth noting. TNB has been talking about cutting dependence on coal all the while, but the revenue generated from coal actually increased to 24% of total revenue in 2022 from 19% in 2021. TNB is qualifying this to still be in line with their goals by stating that “We continue to maintain our revenue from coal generation plants to be below 25% of our total revenue in FY2022”.

#2: TNB to Shift to Green and Renewable Energy and Reduce Emissions to Zero by 2050

Most of its renewable energy originates from hydropower, which comprises 95% of total renewable energy in 2022 while solar is only about 5%. As TNB moves away from coal, green and renewable energy becomes more important in its efforts to reduce 35% of its carbon emissions by 2035 and 100% by 2050. From what I have read about TNB’s strategy, it can broadly be divided into 3 main ones:

  • Utilising more green and renewable energies.

Early retirement of coal plants and upgrading of existing plants with cleaner technologies. Adopt more clean energy technologies such as hydro power, Carbon Capture Usage Storage (CCUS), hydrogen fuel, and Small Modular Reactors. Expand renewable energy capacity to 7,000 MW by 2030 and 14,000 MW by 2050.

  • Investing and modernizing the grid and network infrastructure.

TNB is trying to implement the Grid of the Future (GoTF) strategy, which simply means that it wants to create a modern grid and distribution network that is more efficient and enables its customers to also generate their own electricity. TNB is trying to achieve Smart Grid Index (SGI) coverage of 85% by 2025 from 71.4% in 2022 and is planning to invest a total of RM21 billion in capital expenditures from 2022 to 2024.

  • Implementing more smart meters and carbon-efficient technologies.

TNB plans to increase the installation of smart meters from 2.6 million currently to about 9 million by 2029, which will enable better monitoring of electricity usage. It also targets to install 700,000 LED lamps by 2026, which has been estimated to reduce electricity consumption by about 40% to 50%.

TNB hopes to generate more of its income from renewable energy and GoTF, and projects that it could achieve Earnings Before Interest and Taxes (EBIT) of RM19 billion, where 58% of this income will come from future generation sources and new green businesses.

#3: TNB will Continue Investing in R&D but 2022 was a Down Year

The key success factor in TNB achieving zero carbon emissions by 2050 rests in TNB’s investments in research and development (R&D). On this front, TNB’s investments in R&D have increased in the pandemic years but declined to RM60 million in 2022. For the year 2023, TNB will allocate about RM60 million also for R&D.

Just looking at the overall numbers, there are some concerns that TNB is not investing enough in R&D. In 2022, total capital expenditures (CAPEX) came up to RM8.6 billion, where this would mean that R&D investments would only account for about 0.7% of CAPEX. The fact that R&D investment is projected to decrease in 2022 and 2023 is sending some mixed signals about TNB’s commitment.

However, putting that aside, there are some investments by TNB that are noteworthy:

  • Floating Solar

TNB constructed a pilot floating solar plant in Sultan Azlan Shah Power Station which had an installed capacity of 105.1 kWp. It is now conducting a feasibility study on floating solar potential in its hydro dams, and this is important. As mentioned previously, hydropower consists of 95% of its renewable energy mix, while solar only consists of 5%. It is imperative that TNB increases solar energy usage as hydropower is known to be environmentally damaging.

  • Biogas and Biodiesel Fuel

TNB is conducting research into biogas plants from food and animal waste, and also plants to develop a fully-automated, large-scale biodiesel processing unit to produce biodiesel from waste cooking oil. Furthermore, it has concluded research on biogas production using empty fruit bunch fibers and palm oil mill effluent.

#4: TNB is still a Male-Dominated Company, But Its Gender Diversity is Gradually Improving

Make no mistake. Most of TNB’s workforce still comprises of male, comprising about 78.6%. The percentage of women had subsequently improved to 21.4% in 2022 from 21.0% in 2019, driven mainly by an increase in women in the senior management and executive levels. Proportion of women in senior management increased the most from 19.7% in 2019 to 24.3% in 2022, while women in executive levels are becoming more equal at about 40.3% currently. The reason why most of TNB’s workforce is still very male-dominated is due mainly to the non-executive level (consisting mainly of contractors and technicians), where women only accounts for about 14.8% of non-executive workforce.

Let’s move on to the board. I would consider the board diversity to be quite inclusive. Men make up just 45% of TNB’s board in 2022, where the remaining 55% are women. The expertise in its board are quite evenly split between finance & accounting and engineering which is important to maintain that balance between business profitability and the technical expertise required to run the company. Here are the details surrounding who is currently on the board.

#5: TNB is Rated 4 out of 5 For 2022’s Board Evaluation Results (BEA)

Yes, there is a rating for board effectiveness in Malaysia. TNB has done its Board Evaluations through the guidelines provided by Bursa Corporate Governance Guide (4th edition). The questionnaires were:

  1. Questionnaire relating to ESG or Sustainability
  2. Board & Board Committees Effectiveness Assessment
  3. Directors and Board Committee Members’ Self and Peer Assessment (SPA)
  4. Board Audit Committee Evaluation
  5. Board Audit Committee SPA

For TNB, it achieved a score of 4 which indicates that the performance of the board and its committees were satisfactory. Furthermore, it also declared that all of its directors received a total of RM8 million in salary, remunerations, and benefits from TNB. Staff cost came up to about RM3.9 billion in 2022, which means that the amount paid to board directors was not excessive. The picture below represents how much was paid to each director.


Reading up on TNB’s ESG statements could be daunting but if there are 3 main points that you should get from this article, it would be:

  • TNB is moving to reduce coal dependence and increase renewable energy, to cut emissions completely by 2050, but revenue contribution from coal actually increased in 2022 from 2021, and investments into R&D is expected to decrease in 2022 and 2023 from the pandemic years. This casts some doubts on whether it could successfully reduce 50% by 2035.
  • Bear in mind that most of its renewable energy mix is still dominated by hydropower which traditionally has been associated with impact on the surrounding environment of the dams.
  • It is still a male-dominated company, but diversity is starting to show gradual improvements with the board composed of more women, and senior management’s women proportion starting to increase.



Ho Su Wei

Founder of Slice of P.I.E and hopes to provide simple investment, economics and personal development insights to ordinary people.