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You can download the full report HERE

Sustainability and climate change are important issues that financial institutions should consider given the significant risks they posed to the financial system. Given the huge contribution of the financial sector to the economy, the financial institutions play an important role in supporting Malaysia’s commitment to the United Nations' (UN) 17 Sustainable Development Goals (SDGs) and the Paris Agreement, including Malaysia’s aspiration to achieve net zero greenhouse gas emission by 2050, as announced at the 2021 United Nations Climate Change Conference (COP26).

At the regional level, several ASEAN countries have made national decarbonisation commitments at COP26 in line with the Paris Agreement aspiration. While the majority have pledged to reduce emission levels by 2030, only six out of ten ASEAN countries have committed to net zero with Malaysia being one of them1 . In taking the climate agenda forward for Malaysia, the 12th Malaysia Plan outlines the nation’s path towards net zero emission by committing to a carbon neutral target by 2050 and the phasing out of coal power generation.

The financial sector in Malaysia is guided by the respective blueprints and masterplans released by the regulators, including in addressing sustainability and climate issues. In September 2021, the Securities Commission Malaysia (SC) launched the Capital Market Masterplan 3 (CMP3) which serves as a strategic framework for the capital market to continue to support the economy as we transition into an inclusive and sustainable country. More recently, Bank Negara Malaysia (BNM) launched the Financial Sector Blueprint 2022- 2026 with the primary objective of facilitating an orderly transition of the banking system into a greener economy. As part of an initiative to support this agenda, the Joint Committee on Climate Change (JC3) launched a survey in November 2021 involving the financial institutions in Malaysia to understand and assess the current state of sustainability practices and readiness within the financial sector.

It focuses on four key aspects of sustainability practices:

• Sustainability commitment and strategy
• Governance and risk management
• Green products and solutions
• Climate disclosures

The report sets out the results of this survey and observations on the common issues within the industry. Based on the survey results, Malaysian financial institutions have demonstrated commitments on sustainability and climate issues. There have also been concerted efforts to embed climate risk as part of the risk management framework and governance oversight. There are also opportunities to accelerate the readiness of the Malaysian financial sector in furthering the sustainability and climate agenda further.

A great deal remains to be done; however, we hope that this report will provide some insights on the common issues to be addressed in the industry, and the next steps forward for the Malaysian financial sector.

Source: Joint Committee on Climate Change (JC3)