Growth Without Guardrails: Why We Need To Rethink How We Measure Sustainability
- Vyshnavi Charrlotte

- 15 hours ago
- 5 min read
Prepared by Aliya Lutfi & Vyshnavi Charrlotte
6 February 2026

Malaysia’s Green Policy Landscape: Process and Fragmentation
Malaysia has positioned digitalisation as a major force behind productivity, competitiveness, and industrial upgrading, placing the digital economy at the core of its growth strategy. Simultaneously, the nation has made commitments related to sustainability and climate change, indicating a desire to pursue development that is more ecologically conscious and inclusive. According to previous research on Malaysia's sustainable development pathways, economic strategies that are not integrated with environmental and social objectives run the risk of reproducing policy fragmentation, where sustainability goals remain aspirational rather than operational. Growth by itself does not always result in sustainable outcomes unless it is directed by well-defined institutional and policy frameworks.
The growth of digital industries, which present both opportunities and risks to the environment and society, is a prime example of this tension. Digital technologies can boost productivity and encourage creativity, but they also raise energy consumption, increase the need for infrastructure, and increase resource consumption. Social issues also surface, including regional disparities, inclusion, and working conditions. Digital growth may surpass the governance frameworks meant to control it if there are no systems in place to evaluate and control these effects. Therefore, careful, evidence-based policy integration is necessary to match Malaysia's digital aspirations with its climate and social goals.
Overview of Key National Strategies
Current industrial policy frameworks designed to shift Malaysia's economy away from reliance on commodities and towards higher value-added manufacturing have long guided the country's economic growth. Industrial plans have been successful in drawing investment and fostering sector expansion, but there are still issues with converting policy objectives into long-term technological advancement and high-value jobs. There has been inconsistent coordination between government agencies, alignment of investment incentives with long-term capability building, and integration of new priorities like sustainability, digitalisation, and climate resilience.
Recent developments indicate that sustainability, ESG principles, and alignment with the Sustainable Development Goals are increasingly mentioned in national frameworks. However, rather than being integrated into fundamental economic and industrial decision-making processes, these commitments are frequently articulated at a high level and translated into stand-alone strategies, guidelines, or pilot projects. In reality, sustainability goals are often implemented after infrastructure plans, industrial incentives, and investment priorities have been established. This restricts their ability to influence the growth of industries, the distribution of resources, and the management of trade-offs.
Weak cross-agency coordination, dispersed regulatory responsibilities, and incentives that are inconsistently in line with long-term sustainability outcomes all contribute to the implementation challenge. ESG, green technology, and digitalisation agendas are pursued by various ministries and agencies, but these initiatives frequently run concurrently rather than within a cohesive framework. Because of this, businesses may receive conflicting signals, with investment incentives encouraging quick growth while sustainability regulations are either optional or loosely enforced. This pattern is reinforced by Malaysia's experience with industrial policy: green aspirations run the risk of remaining performative rather than transformative in the absence of institutional mechanisms that systematically align sustainability goals with investment, regulation, and industry behaviour. This disparity highlights the need for a framework that combines industrial policy, digital growth, and sustainability into a logical and useful model.
The Hidden Costs of Digital Industrial Growth
Although crucial to Malaysia's economic transition, the swift expansion of digital infrastructure has social and environmental implications that are frequently disregarded. Energy consumption is increased by digital technology, especially through data centres and networks, which use a lot of water and electricity. The demand for electricity from data centres in Malaysia is expected to increase significantly, adding to the strain on a grid that is still largely dependent on fossil fuels. Despite possible efficiency advantages from digital technologies, the environmental impact of digital infrastructure could increase if steps are not taken to incorporate renewable energy and improve efficiency.
Communities and individuals are also impacted by the growth of the digital industry. The skills that workers require are changing due to automation and new technologies, which could lead to job insecurity for those without training. Rural communities are frequently left behind as opportunities tend to concentrate in urban areas. Health and social risks can also arise from energy-intensive infrastructure and improperly managed electronic waste. Because growth and investment are typically given priority in current policies, these effects are not adequately quantified or addressed. To guarantee that digital growth benefits everyone without endangering the environment, it is crucial to make social and environmental costs visible.
Rethinking Development: National Sustainable Development Model (NSDM)
These difficulties show that traditional growth-oriented policies are insufficient. Growth by itself cannot ensure sustainable or inclusive results, as evidenced by rising energy demand, e-waste, skills gaps, and regional disparities. In order to close these gaps and direct Malaysia's industrial and digital development, an Asian-centered National Sustainable Development Model (NSDM) is needed to integrate social, environmental, and economic goals. Creating a non-Western influenced NSDM with a focus on Malaysia will help link social goals with digital, industrial, and climate strategies. It guarantees that social inclusion, environmental responsibility, and economic growth are all balanced by integrating multiple goals. Instead of being optional add-ons, this model transforms current ESG initiatives, green technology strategies, and digital inclusion programs into coordinated, actionable policies.
Four fundamental ideas form the foundation of the NSDM: 1) Green industrial policy promotes energy efficiency, the use of renewable energy, and the prudent use of resources by integrating sustainability into industry design and operation. 2) Climate resilience guarantees that economic and infrastructure planning takes environmental risks like rising energy demand and carbon emissions into account. 3) While digital inclusion ensures that all communities have access to technology and services, 4) social equity encourages workforce inclusion, skill development, and regional balance. When combined, these ideas offer a methodical, empirically supported road map for inclusive, sustainable growth.
Setting the Direction for Sustainable Digital Growth
Malaysia's digital economy is expected to grow dramatically over the next ten to twenty years, bringing with it both opportunities and challenges for social inclusion and environmental sustainability. Growth can lead to hidden costs, disjointed policies, and unequal benefits across communities if economic, environmental, and social goals are not carefully integrated. Although the National Sustainable Development Model offers a framework for decision-making, its effectiveness will rely on continuous monitoring, cross-sector coordination, and consistent implementation. Policymakers, industry, and civil society will need to work together to manage trade-offs, address emerging risks such as energy use, e-waste, and workforce shifts, and ensure that digital growth does not exacerbate inequalities or environmental pressures. The coming decades will require measured, evidence-based approaches, with sustained attention to alignment between Malaysia’s economic ambitions, climate commitments, and social objectives.
References :
[1] Ibrahim, K., Shabudin, A. F. A., Chacko Koshy, K., & Asrar, G. R. (2016). A new framework for integrated climate finance and inclusive responses to sustainable development in Malaysia. Geomatics, Natural Hazards and Risk, 7(6), 1754-1768.
[2] Rasiah, R., Mohd-Nor, R., & Zhang, M. (2024). CHARTING THE ECONOMY: REVISITING THE INDUSTRIAL POLICY EXPERIENCE OF MALAYSIA. International Journal of Business and Society, 25, 26-38.
[3] Mahdi, N. A. N., Fernando, Y., & Ibrahim, A. (2024). Revealing the path to a green economy: Insights and recommendations for sustainable development in Malaysia. International Journal of Integrated Engineering, 16(2), 245-258.
[4] Tram, N.H.M. (2025). Digital transformation, financial development and economic growth as determinants of environmental sustainability in ASEAN countries. Discov Sustain 6, 848 https://doi.org/10.1007/s43621-025-01721-9
[5] MyDigital. (n.d.). Growing the digital economy with an enabling digital environment. https://www.mydigital.gov.my/growing-the-digital-economy-with-an-enabling-digital-environment/



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