How ESG Bonds and Sukuk Can Accelerate Malaysia’s Green Technology Master Plan

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How ESG Bonds and Sukuk Can Accelerate Malaysia’s Green Technology Master Plan

Introduction

Malaysia’s Green Technology Master Plan (GTMP) 2030 aims to position the country as a leader in sustainable development, targeting carbon neutrality by 2050 and a green economy contribution of RM100 billion by 2030. To achieve these ambitious goals, ESG bonds and sukuk are emerging as critical financing tools, attracting both domestic and global investors.

Figure 1: Key areas targeted for the mainstreaming of green technology, Green Technology Master Plan, Prime Minister Office

Figure 2: Five strategic thrusts for the development of conducive ecosystems for Green Technologies growth, Green Technology Master Plan, Prime Minister Office

The Rise of ESG Bonds & Sukuk in Malaysia

The ESG sukuk market is growing fast. According to London Stock Exchange Group (LSEG), issuance of ESG sukuk grew by 14% year-on-year, to $15.2 billion in 2024. Over that period, it represented 1.8% of total ESG bond issuance, and 6.1% of total sukuk issuance. According to Securities Commission Malaysia (SC) chairman keynote address at Bond and Sukuk Trustee Forum 2024, to reach net zero by 2050, annual clean energy investment of around US$4 trillion is needed by 2030. Malaysia alone needs RM1.2 trillion to RM1.3 trillion by 2050. Since the launch of the SC’s SRI Sukuk Framework, total outstanding SRI issuances have approached RM27.3 billion as 2023. Malaysia only accounts for 25% of the US$49.1 billion total issuance of ASEAN Green, Social and Sustainability bonds and sukuk. The global environmental, social and governance (ESG) sukuk market is set to surpass US$50 billion outstanding in 2025, according to Fitch Ratings. ESG sukuk remains one of the key dollar funding tools among the Islamic finance markets in Malaysia, Saudi Arabia, the United Arab Emirates and Indonesia, the firm added. The total value of ESG sukuk, which includes green, social and sustainable sukuk, has been growing rapidly in Malaysia. As of recent data from 2023-2024, Malaysia's total ESG sukuk issuance is estimated to be well over RM30 billion, and the value is expected to continue to rise as more issuers, including corporations and the government, turn to ESG sukuk to finance sustainable projects.

Key ESG Bond/Sukuk Trends Supporting GTMP

Government-Led Green Sukuk
- Bank Negara Malaysia (BNM) issued RM5.5 billion in sustainability sukuk (2023), funding renewable energy (RE) and electric vehicle (EV) infrastructure.
- The World Bank endorsed Malaysia’s sovereign green sukuk framework, boosting investor confidence.
Corporate Green Financing
- PETRONAS raised RM4.8 billion via sustainability-linked bonds (SLBs) for carbon capture and hydrogen projects.
- Tenaga Nasional (TNB) issued RM3 billion green sukuk for solar and hydropower expansion.
Blended Finance & Public-Private Partnerships
- The Malaysia Green Technology and Climate Change Corporation (MGTC) collaborates with banks to structure blended ESG sukuk, combining public grants with private capital.

How ESG Bonds & Sukuk Support GTMP 2030 Goals

Challenges & Opportunities

Challenges:

Limited standardized ESG metrics for issuers.
Higher due diligence costs for green projects.
Investor education needed on Sharia-compliant ESG instruments.

Opportunities:

✔ Digital Sukuk & Blockchain – BNM’s DuitNow Sukuk streamlines retail investor access.
✔ ASEAN Green Taxonomy – Malaysia’s alignment improves cross-border ESG investments.
✔ Carbon Credit-Linked Sukuk – New structures incentivize emissions reduction.

The Road Ahead

With GTMP 2030 in full swing, ESG bonds and sukuk will be pivotal in:

Scaling up renewable energy (target: 31% RE mix by 2025).
Building climate-resilient infrastructure.
Attracting foreign ESG investments (especially from the Middle East and Europe).

BIX Malaysia support ESG investments

In a bold move to accelerate Malaysia’s green finance agenda, BIX Malaysia has unveiled its Sustainable and Responsible Investment (SRI) Center —a dedicated digital hub on the BIX website designed to empower investors, businesses, and the public with critical ESG investment insights.

Once considered niche, SRI has now surged into the mainstream, fueled by a global shift toward climate-conscious investing. Discerning investors are increasingly aligning their portfolios with sustainable ventures, recognizing the capital market’s pivotal role in financing a greener future.

The SRI Center is more than just a webpage—it’s a comprehensive toolkit for navigating the future of finance, featuring:

SRI Overview
Articles & Tutorials
SRI Announcements
BPAM ESG Bond Index
Listings

And many more….

Conclusion

Malaysia’s leadership in ESG sukuk and green bonds provides a competitive edge in achieving its Green Technology Master Plan. By leveraging Islamic finance principles and global sustainability trends, Malaysia can secure RM100 billion in green investments by 2030, driving both economic growth and environmental resilience.

Disclaimer
This report has been prepared and issued by Bond and Sukuk Information Platform Sdn Bhd (“the Company”). The information provided in this report is of a general nature and has been prepared for information purposes only. It is not intended to constitute research or as advice for any investor. The information in this report is not and should not be construed or considered as an offer, recommendation or solicitation for investments. Investors are advised to make their own independent evaluation of the information contained in this report, consider their own individual investment objectives, financial situation and particular needs and should seek appropriate personalised financial advice from a qualified professional to suit individual circumstances and risk profile.

The information contained in this report is prepared from data believed to be correct and reliable at the time of issuance of this report. While every effort is made to ensure the information is up-to-date and correct, the Company does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information contained in this report and accordingly, neither the Company nor any of its affiliates nor its related persons shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.

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How ESG Bonds and Sukuk Can Accelerate Malaysia’s Green Technology Master Plan

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