Joint Statement by Bank Negara Malaysia and Securities Commission Malaysia Accelerating the Financial Sector’s Response to Climate Risk

The Joint Committee on Climate Change (JC3) held its seventh meeting on 26 April 2022. Discussions centred on the progress of action plans and priorities for 2022, and effects of recent global developments on transition efforts and policy responses of countries. JC3 members noted that these developments could heighten the prospects of delaying the progress of transition efforts and underscore the need for the financial sector to strengthen its response to climate change.

Key updates on the work of sub-committees established under JC3 include:
 

According to Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive, Securities Commission Malaysia and Co-Chair of JC3, "Financial institutions are initiating steps to embed climate risk in their strategy and risk management framework and are making considerable progress in committing to Net Zero targets. There is also an increasing supply of green financial and investment products in the market. In driving the sustainability agenda, the top three challenges identified in the Report are poor data quality and availability, lack of incentives, and low awareness of green finance solutions in the market. Cohesive efforts are required in addressing these challenges to accelerate the pace of transition and support an orderly transition to Net Zero.”

Further commenting on the progress of other initiatives by the JC3, Jessica Chew, Deputy Governor, Bank Negara Malaysia and Co-Chair of JC3, said “The issuance of the draft Application Guide and work on the data catalogue are timely as financial institutions are preparing for mandatory TCFD-aligned climate-related financial risk disclosures in 2024. We expect financial institutions to adopt the stretch recommendations set out in the Application Guide to encourage positive cascading effects on economic activities that interact with the financial sector. Given the significant financial impact of climate-related risks, this will also improve market transparency on how financial institutions integrate climate risk considerations into business decisions and risk management”.

JC3 members also discussed the CEO Action Network (CAN) – Climate Governance Malaysia (CGM) Report on Exploring a Low Emissions Pathway for Malaysia (report can be found here) and considered further ways in which the financial sector can contribute to support a low emissions pathway for Malaysia, while noting that broader legislative and structural imperatives remain critical.

JC3 members welcomed plans by the Value-based Intermediation Community of Practitioners (VBI COP) to deliver the third cohort of VBIAF sectoral guides which will focus on the mining and quarrying, agriculture, transportation and storage, and waste management sectors. This complements the sectoral guides on six sectors/activities already issued thus far. JC3 will continue to actively promote alignment between the VBIAF and the CCPT.

At this meeting, JC3 members also welcomed the participation of two new members from the capital market and three new observers in the committee.


BANK NEGARA MALAYSIA
SECURITIES COMMISSION MALAYSIA

Source: Securities Commission Malaysia

Disclaimer
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, Bond and Sukuk Information Platform Sdn Bhd (“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.