KUALA LUMPUR: The Securities Commission Malaysia (SC) will be releasing the Sustainable and Responsible Investment (SRI) Taxonomy framework by the end of the year.
The framework would act as the guiding principles to identify and classify economic activities that support environmental, social and sustainability objectives.
Executive chairman Datuk Dr Awang Adek Hussin said the SC is finalising the SRI Taxonomy following a public consultation paper issued in December last year.
“We will continue to pursue the SRI agenda for the next phase of the market development.
“This is clearly articulated in our Capital Market Master Plan 3 (CMP3). The SRI, along with the Islamic capital market (ICM), will play a key role in accelerating the transition to a sustainable and inclusive stakeholder economy,’’ he said.
He said this during the SRI Virtual Conference 2022, titled ‘Preserving the Climate through Sustainable Business and Living’.
He said the SC intends to expand the range of products and services for Islamic social finance and impact investing, in alignment with SRI principles.
“SC will also be developing a framework for market-based instruments to enable transition finance in Malaysia. This will increase funding options for companies at various stages of their sustainability journey,’’ Awang Adek said.
He said Malaysia’s sustainable investments journey started as early as 2014 when the SC’s SRI Sukuk Framework was introduced, which allowed for funds to be raised to finance a wide range of green, socially beneficial and sustainable projects.
To date, a total RM8.3 billion of SRI Sukuk has been issued under this framework.
Subsequently, the Guidelines on SRI Funds was rolled-out in 2017 to facilitate the growth of environmental, social and corporate governance (ESG) funds in Malaysia.
As of 2021, 34 SRI funds have been launched, offering wholesale and retail investors the opportunity to invest in conventional and Shariah-compliant ESG-focused funds.
“Businesses today face rising expectations from stakeholders and the communities they serve. More than ever, they are being assessed on their sustainability commitments and handling of social issues, and our corporates are rising to the challenge.
“Recent research by PricewaterhouseCoopers (PwC) found that 94% of the top 50 Malaysian public-listed companies have ESG strategies in place,’’ he noted.
He added that sustainable and inclusive business practices benefit not just shareholders, but all stakeholders.
Therefore, boards and management must take the lead and ensure that sustainability is at the heart of business strategy and operations.
“Crucially, investors must also play their role by shining a spotlight on the credibility of corporate commitments and shape the narrative ahead.
“Progress has certainly been made. But there is still a long way to go,’’ said Awang Adek.
He said moving forward, the key to managing the transition to a more sustainable and greener future is the availability of financing and impetus for change.
“Sustainable change requires investments in new technologies and innovative solutions.
“Market-based funding and risk management instruments are well-equipped to facilitate public and private efforts in climate mitigation and transition,’’ he said.
He added that Bloomberg Intelligence has estimated global ESG-related assets under management to grow to US$50 trillion (RM221 trillion) by 2025, primarily driven by fund inflows focused on climate change. – Bernama