Malaysia is not just a participant of green finance. “We wrote page one. And not only that, we walked the talk,” said Corporate Streets Sdn Bhd managing director and founder Aida Lim Abdullah.
Speaking at a plenary session on “Transition Finance: Navigating Green Bonds and Sustainability-Linked Loans” at the Asia ESG Summit, she said Malaysians can proudly say that the country launched the world’s first green sukuk for a solar project in Kudat, Sabah, by Tadau Energy back in 2017.
The green sukuk framework was certified by the Center for International Climate and Environmental Research in Oslo, Norway, and RAM Ratings had assigned a rating of AA3/Stable to the green sustainable and responsible investment (SRI) sukuk, she added.
Fast forward to today, Malaysia hosts the largest number of active ESG sukuk, Aida said.
Globally, green finance has also grown into a major market. According to the Climate Bonds Initiative, the aligned cumulative volume of green, social, sustainability and sustainability-linked bonds reached US$6.8 trillion (RM27.6 trillion) as of the end of 2025.
Transition finance refers to financing raised specifically to help a company, sector or economy shift from high-carbon, environmentally harmful activity towards a credible, low-carbon future.
Alongside green bonds and green sukuk, sustainability-linked loans (SLLs) are among the instruments that can support transition finance.
Aida cautioned that SLL could go wrong, citing examples of companies that have expanded on carbon-heavy operations after receiving SLLs.
Before proceeding with financing green deals, Aida said an investor should ask five questions:
Are proceeds ring-fenced and traceable? Is there an independent external review? Are the KPIs material and ambitious? Is there a real financial consequence? Does it fund genuine transition, or business-as-usual?
Hard-to-abate sectors, including oil and gas and heavy industry, have faced limited access to green finance, but Aida said they now have a credible route to transition capital with the international Transition Loan Principles in place.
Malaysia has also built the infrastructure needed to support transition finance. These include the issuance of the Climate Change and Principle-based Taxonomy by Bank Negara, the establishment of the Joint Committee on Climate Change (JC3) to pursue collaborative actions for climate resilience within the financial sector, and the full adoption of Asean Taxonomy for Sustainable Finance as the basis for the Malaysia Taxonomy.
“The first wave of green finance funded the easy sectors. The next wave will find the hard ones,” Aida said.
