KUALA LUMPUR: The Securities Commission of Malaysia (SC) has actively contributed to the ASEAN Taxonomy through the ASEAN Taxonomy Board, which includes central banks, securities regulators and insurance regulators.
Its chairman Datuk Mohammad Faiz Azmi said the taxonomy serves as a regional guide for identifying and classifying sustainable finance activities within the region to supplement national efforts.
"To cater to ASEAN’s diversity, the taxonomy takes a multi-tier approach -- Principles-based Foundation Framework for qualitative assessment across all sectors, and A Plus Standard for quantitative assessment in six focus sectors.
"The ASEAN Taxonomy was the first regional taxonomy to introduce a traffic light system of assessment, with an amber criterion, allowing for transitioning activities that may not meet the criteria of being green (as this is) crucial for supporting diverse economies starting their transition journey,” he said in his keynote address during the Skrine Conference 2024 today.
According to Mohammad Faiz, taxonomies have emerged as powerful tools in providing a clear classification system for investments, ensuring they are aligned with long-term sustainability goals.
"We have seen a surge in taxonomy developments across jurisdictions, driven by the need for consistency and clarity.
"Since the release of the ASEAN Taxonomy Version 1 in 2021, countries like Malaysia, Indonesia, Thailand, and the Philippines have introduced national taxonomies,” he added.
He noted that these frameworks, while rooted in the ASEAN Taxonomy, are tailored to suit local contexts, ensuring relevance and regional coherence in sustainable finance.
"By providing a structured framework, taxonomies enable investors and issuers to make informed decisions, fostering a sustainable financial ecosystem for both the economy and the environment," he said. - Bernama
