Financial institutions’ enhanced response to climate risk is paying off, regulators say

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KUALA LUMPUR (September 1): Greater awareness and efforts by financial institutions to strengthen their response to climate risk have led to increased demand for practical tools and the urgency to close key gaps needed to support the transition, financial regulators said Thursday (September 1).

In a joint statement, Bank Negara Malaysia (BNM) and the Securities Commission (SC) said the Joint Committee on Climate Change (JC3) continues to engage with relevant ministries, government agencies and companies to identify needs. climate and sustainable finance that can be mobilized through the financial sector.

“We are encouraged by the growing attention and concrete actions taken by financial institutions to manage climate-related risks. Further progress, however, will critically depend on key enablers, including data accessibility and the establishment of better disclosures,” said BNM Deputy Governor and JC3 Co-Chair Jessica Chew.

She added that the JC3 remained committed to addressing these challenges, alongside increased efforts to scale up funding for the transition.

Meanwhile, SC Deputy Chief Executive and JC3 Co-Chair Datuk Zainal Izlan Zainal Abidin said it was important for JC3 to have close engagement and collaboration with relevant stakeholders to advance climate action. in Malaysia.

“To this end, the JC3 has led a series of engagements, including a meeting with four key ministries in July to forge closer collaboration with the government,” he added.

Zainal Izlan said such commitments have brought greater clarity on national plans and initiatives that the financial sector and government could pursue and collaborate on, to align their climate actions in the development of an ecosystem conducive to the flourishing of sustainable finance.

The JC3 held its eighth meeting on August 29, 2022 and would continue to focus on several priorities, including the publication of the Task Force on Climate-Related Financial Disclosures (TCFD) Application Guidance for Malaysian Financial Institutions.

Regulators said JC3 is now supporting Capital Markets Malaysia (CMM), a subsidiary of the SC, to develop an ESG disclosure guide tailored to Malaysian small and medium-sized enterprises (SMEs) to improve the quality and access to information on corporate resilience to ESG. – related risks.

JC3 also welcomed the release of the Sustainable and Responsible Investment (SRI-linked) Sukuk Framework by the SC on June 30, 2022, to help companies issue SRI-linked sukuk to support their transition towards low-carbon activities.

In order to further develop sustainable finance offerings from financial institutions, JC3 is actively exploring suitable pilot programs to test new green solutions and instruments such as blended finance to support the development of climate-friendly projects.

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