Malaysia Speeds Up ESG Efforts for Net Zero Transition

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Malaysia’s Joint Committee on Climate Change (JC3) convened recently to deliberate on collaborative strategies aimed at promoting climate resilience within the country’s financial sector. Highlighting the growing traction of sustainable investments in Malaysia, a spokesperson from Bank Negara Malaysia (BNM) emphasized key investment themes focused on accelerating sectoral transition and fostering climate resilience, such as energy transition, circular economy, food security, and mobility transformation.

Established in 2019, the JC3 comprises representatives from various entities, including BNM, Securities Commission Malaysia (SC), Bursa Malaysia, and numerous other financial industry players. The committee unveiled five new initiatives at the meeting, underscoring the pivotal role of the finance industry in enabling a sustainable agenda. These initiatives encompassed a pilot project for transitioning industrial parks to low-carbon practices, data-related endeavors, and a significant RM1 billion guarantee aimed at supporting smaller market players in their pursuit of ESG agendas.

The National Energy Transition Roadmap (NETR) forms a cornerstone in Malaysia’s commitment to green growth and climate resilience. The plan delineates ten flagship projects across multiple energy transition levers, with the aim of fostering sustainable development, creating job opportunities, and reducing greenhouse gas emissions.

Emphasizing the role of technology in driving sustainable practices, Malaysia has embraced an array of initiatives, including legislative efforts in energy efficiency and conservation. Efforts to educate and align smaller-scale investors with relevant Malaysian taxonomies are also underway.

The regulatory landscape in Malaysia has facilitated its energy transition, as evidenced by various sustainability-focused taxonomies introduced by BNM and the SC. The country’s focus on renewable infrastructure projects, including solar and hydro initiatives, has spurred increased investment in the renewable energy sector.

The incorporation of data-driven initiatives, particularly the expansion of the Greening Value Chain (GVC) program, has bolstered Malaysia’s sustainability agenda. Efforts to modernize and transform the ESG approach, especially in the agricultural sector, have gained traction, with initiatives such as the Green AgriTech program showcasing significant potential.

The comprehensive approach to sustainability in Malaysia is a collaborative effort between the government and private sector entities, with a focus on scaling public-private partnerships. The country’s capital market has embraced various frameworks to support the financing of sustainable projects, including the issuance of sustainable sukuk.

In the face of an unprecedented global challenge posed by climate change, Malaysia remains committed to a “whole of nation” approach, demonstrating its dedication to sustainable development strategies and priorities. As the nation gears up for the Conference of Parties (COP)28 in the UAE, the growth of ESG sukuk could receive further impetus, serving as a testament to Malaysia’s enduring commitment to sustainable development.