KUALA LUMPUR: The Securities Commission (SC) has launched the sustainable and responsible investment-linked (SRI-linked) Sukuk Framework to facilitate fundraising by companies in addressing sustainability concerns.
The regulator said with the accelerated shift towards developing a climate-resilient future, high-emitting industries are at a high risk of being phased out.
“The SRI-linked sukuk will enable companies in these as well as other industries to transition into a low-carbon or net zero economy.
“As at Dec 31, 2021, the global sustainable bonds outstanding exceeded US$1 trillion with sustainability-linked bonds making up US$118.8bil,” it said in a statement.
It added that the framework was an extension of the initiatives under the SRI Roadmap that was introduced in 2019 to broaden SRI products offerings.
More significantly, this initiative reflects the SC’s commitment to expand the reach of the Islamic Capital Market (ICM) to the broader stakeholders of the economy and build an enabling ICM ecosystem for the sustainability agenda.
“The SRI-linked Sukuk framework will encourage greater mobilisation of private sector and issuers’ financing towards sustainable development and meet the increasing global demand for sustainable financing.
“This is in line with the initiatives outlined in the Capital Market Masterplan 3 to reinforce Malaysia’s value proposition as the regional centre for Shariah-compliant SRI,” SC chairman Datuk Seri Dr. Awang Adek Hussin said.
Under the framework, the proceeds raised can be utilised for general-purpose, subject to the issuer committing to future improvements for sustainability outcomes within a predefined timeline, which will be monitored using key performance indicators (KPIs).
The financial characteristic or structure of the SRI-linked sukuk may be varied based on the success or performance of the issuer in meeting its KPIs and sustainability goals.