SC urges financial sector to help businesses become greener, more resilient

KUALA LUMPUR: The Securities Commission Malaysia (SC) has called on the financial sector, including the capital market, to support funding for businesses to become greener and more resilient in the transition to a low-carbon economy.

SC managing director Datuk Kamarudin Hashim said that between RM1.2 trillion and RM1.3 trillion in funding, including investments in renewable energy, energy efficiency, and green mobility, would be required for Malaysia to achieve its energy transition goals by 2050.

"Achieving this will require collective efforts across several sectors, with regulators leading coalitions and

fostering collaboration to facilitate a smooth transition,” he said in his keynote address at the Kuala Lumpur International Sustainability Conference titled "Synergising Climate Action: Fostering Collaboration Across Regulators, Corporations, and Academia” today.

Kamarudin said the financial sector, particularly the capital market, would continue to facilitate the financing and investments needed to support the country’s priorities and commitments.

He said that to facilitate fund raising, the availability of reliable and comparable sustainability-related information would be critical.

On that note, he said the Advisory Committee of Sustainability Reporting, formed last year with the endorsement of the Ministry of Finance and chaired by the SC, has been looking into the use of the sustainability disclosure standards issued by the International Sustainability Standards Board (ISSB) as the baseline standards for disclosures by Malaysian corporate bodies.

"The SC, together with our fellow committee members from the Audit Oversight Board, Bank Negara Malaysia (BNM), the Companies Commission of Malaysia, Bursa Malaysia and the Financial Reporting Foundation, has undertaken extensive engagements with stakeholders, including listed and non-listed companies, investors, assurance providers, via a public consultation process, focus group discussions as well as roundtable dialogues with the relevant ministries and agencies.

"It was important that we canvass and syndicate as much feedback as possible from these stakeholders to inform the design of the National Sustainability Reporting Framework (NSRF),” he said.

He said the insights gathered from these engagements highlight the importance of balancing multiple considerations including the timing for implementation, which companies to scope in, and overall readiness of the ecosystem.

"More than 20 jurisdictions representing nearly 55 per cent of global gross domestic product have decided to use or are taking steps to use the ISSB standards, bringing us closer to having a single common language for communicating on sustainability.

"Our primary driver is to ensure Malaysia’s competitiveness as an exporting country is secured as well as the contribution of our companies in the global supply chain.

"The committee targets to announce the approach for the NSRF in the second half of this year,” he said.

Moving forward, he said the SC will work on the next iteration of the Principles-based Sustainable and Responsible Investment (SRI) Taxonomy for the Malaysian Capital Market that will provide greater guidance to the industry, which includes future refinements of the SRI Taxonomy and development of more detailed guidance that is consistent with national policies.

"In recent years, we have also seen a growing recognition of the importance of incorporating sustainability considerations into investments, particularly in private markets.

"However, private market participants in Malaysia are still in the early stages of understanding this importance.

"One of the major challenges they face is the lack of clear guidance and best practices, which means that the integration of sustainability in investment and due diligence processes is still nascent,” he noted.

Recognising this need and in line with the SC's recommendation outlined in the SRI Roadmap to broaden access to SRI via alternative funding avenues, Kamarudin said the SC issued the SRI Guide for Private Markets in December 2023.

"This provides voluntary guidance to private market players, including venture capital/private equity (VC/PE) and equity crowdfunding/peer-to-peer (ECF/P2P) platform operators, on how to integrate sustainability considerations into their investments and due diligence processes,” he said.

He urged regulators, corporations, academia, and civil society to collaborate and coordinate their actions to drive meaningful change.

"As a regulator, the SC remains steadfast in its commitment to accelerate the development of sustainable and responsible investment in the country, working closely with ministries, other regulatory bodies, and relevant agencies to shape sustainable development and climate policies for Malaysia,” he added. - Bernama

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