Can the Paris Agreement Deliver? Malaysia’s Role in Building a Sustainable Future

The Paris Agreement is often hailed as a global framework that aims to address climate change by limiting global warming below 2°C above pre-industrial levels, with efforts to keep it below 1.5°C. The agreement was established during the United Nations Framework Convention on Climate Change (UNFCCC) Conference of Parties (COP21) in 2015, adopted by 196 countries, marking an ambitious vision for international cooperation on climate action. However, its effectiveness remains a subject of ongoing debate, with critics questioning whether it can deliver on its promises. 

As of January 2025, global temperatures have risen approximately 1.6°C above pre-industrial levels. The world experienced its hottest year on record last year with temperatures exceeding the 1.5°C threshold set by the Paris Agreement for the first time [1] [2]. This significant increase in global temperatures has led to more frequent and severe climate-related events, such as wildfires, floods, and heatwaves. Recent Southern California wildfires showcase a worrying phenomenon, exacerbated by prolonged drought and higher temperatures [3]. The consistent rise in temperatures underscores the urgent need for enhanced global efforts to reduce greenhouse gas (GHG) emissions and mitigate the impacts of climate change. 

Unlike traditional treaties, the Paris Agreement unfortunately is not a legal binding but instead are voluntary commitments known as Nationally Determined Contributions (NDCs). These NDCs are pledges from each country detailing their specific plans to reduce GHG emissions and adapt to climate impacts. Countries are expected to update their NDCs every five years to show increased ambition, but progress has been underwhelming. While some nations have made notable advancements, global emissions remain far from the reductions needed to meet the Agreement’s targets. The gap between promises and action underscores a critical challenge: can the world truly achieve the necessary transformations in time? 

Malaysia, like many other countries, has stepped forward with its own commitments under the Paris Agreement. In 2021, Malaysia pledges to reduce its GHG intensity by 45% per unit of GDP by 2030, compared to 2005 levels. However, balancing economic growth with sustainability targets may prove to be a tough task as key industries like fossil fuel, energy, and palm oil sectors, which drive much of the economy, require a just transition. Government initiatives like large-scale solar projects and development of sustainable aviation fuel (SAF) by 2027 are promising, but their impact is still in its early stages [4] [5]. 

A notable step forward was introduced in the 2025 Budget, which includes the implementation of a carbon tax for iron, steel and energy industry by 2026. This targeted approach aims to address the significant emissions generated by high-impact sectors, incentivising them to adopt cleaner technologies and sustainable practices. While the exact tax rates and mechanisms are still being finalised, the policy may help the nation to meet its 2030 pledge. For industries affected by this tax, this presents both a challenge and an opportunity—to innovate, improve energy efficiency, and transition to renewable energy sources. For SMEs operating within or alongside these sectors, it underscores the urgency of integrating sustainability into their operations to remain competitive and avoid financial penalties. 

A crucial, often overlooked aspect of achieving the Paris Agreement’s goals lies in the role of private companies and small and medium-sized enterprises (SMEs). SMEs account for nearly 40% of Malaysia’s GDP and employ over half of its workforce, making their collective environmental footprint significant. To align with national and global climate goals, these businesses must adopt sustainable practices such as energy efficiency, waste reduction, and the use of renewable energy. Meanwhile, larger corporations must leverage their resources to set ambitious targets and lead by example. The private sector’s active participation is not just desirable; it is indispensable. 

Globally, the Paris Agreement has been criticised for its lack of enforceability and dependence on voluntary actions. Still, it has successfully fostered a unified vision for climate action and driven collaboration among nations. To transition from commitments to impactful results, it will require not only government leadership but also meaningful contributions from businesses and individuals. This includes investing in green technologies, supporting innovation, and embedding sustainability into every facet of decision-making. 

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