Ecowatch: Malaysia is working on its own green funds

While there is capital available to Malaysian companies for green and climate projects, access and bankability are issues that prevent wider take up. — 123rf

WITH much of the climate finance under the COP (Conference of Parties to the Climate Agreement) framework still tied up (see "When climate aid falls short"), Malaysia, like other developing countries, will have to look elsewhere for immediate green funds.

Bank Negara Malaysia governor Datuk Abdul Rasheed Ghaf-four explained why it is particularly urgent for Malaysia to do so in the speech he gave at the Joint Committee on Climate Change Journey to Zero Conference in 2023: 25% of Malaysia’s population could be displaced due to climate change by 2030.

The United Nations estimates that while the Asia-Pacific region, including South-East Asia, needs about US$422bil (RM1.716 trillion) by 2030 for climate mitigation and adaptation, current finance flows into the region are only up to US$6bil (RM24.36bil) a year.

While Malaysia recently secured a €2.8mil (RM13.29mil) grant from the Green Climate Fund to come up with a national adaptation plan, much of our green financing now comes from our own initiatives, such as Dana Iklim+ under KWAP (the Retirement Fund [Incorporated]); this is the country’s first dedicated climate investment fund and it will deploy up to RM2bil. Another local source is the Green Technology Financing Scheme, which provides accessible and affordable funding to businesses investing in green technology projects.

But besides buying insurance against floods and depending on the government for immediate aid, what else can ordinary Malaysians and local businesses do to better guard themselves against the impacts of climate change?

How can they be more resilient as floods become increasingly frequent and more devastating in impact?

Dr Renard Siew says that although insurance is important, it is really only one layer of protection.

“At the household and community level, preparedness needs to be more proactive and collective.

“This includes better access to early warning systems, community-level disaster response plans, and clearer communication channels with local authorities,” he says.

Siew, who is the Malaysia Carbon Market Association president, explains that strengthening local disaster response capacity through community drills, emergency savings mechanisms, and mutual aid networks can significantly reduce response time when disasters strike.

“This means having pre-arranged disaster financing facilities, faster disbursement mechanisms, and clearer eligibility criteria so that aid does not get delayed by bureaucracy at the moment it is most needed. 

“Climate resilience should be treated as essential infrastructure, not an afterthought.

There is, adds Siew, capital available to Malaysian companies for green and climate projects but the challenge is often access and bankability.

“Malaysian companies need to align projects with clear climate outcomes whether it be mitigation, adaptation, or nature-based solutions, and ensure these are supported by credible data, transition plans, and governance structures.

“This is increasingly what financiers, both domestic and international, are looking for,” he says.

While blended finance, green- and sustainability-linked financing, and emerging carbon market mechanisms can all play a role, Siew points out that they all require clearer pipelines of investable projects and stronger coordination among government, financial institutions, and project developers.

Blended finance is when public money is used to reduce risk for a project so that private investors are willing to put more money in.

Equally important, he stresses, is policy certainty.

When companies have confidence in long-term climate and transition policies, capital flows more easily and at lower cost, he says.

“Ultimately, the growing cost of disasters reinforces a simple point: climate finance is not a ‘nice to have’, it’s a must have.

“It is about risk management, economic stability, and protecting livelihoods. Delaying it only shifts a much higher bill to households, businesses, and governments later.”