Kuala Lumpur, 28 August 2014
SC Introduces Sustainable and Responsible Investment Sukuk framework

The Securities Commission Malaysia (SC) today launched the Sustainable and Responsible Investment (SRI) Sukuk framework to facilitate the financing of sustainable and responsible investment initiatives. The proposal on the SRI sukuk framework was first announced in the 2014 budget speech.

The launch of the SRI sukuk framework is in line with the initiative set out under the SC’s Capital Market Masterplan 2 to promote socially responsible financing and investment. With the shifts in investor demographics, there are growing concerns over environmental and social impact of business and greater demand for stronger governance and ethics from businesses. The Malaysian capital market is well-positioned to capitalise on these changing trends and facilitate sustainable and responsible investing.

“The introduction of the SRI sukuk framework is part of the SC’s developmental agenda to facilitate the creation of an eco-system conducive for SRI investors and issuers and is also in line with the rising trend of green bonds and social impact bonds that have been introduced globally to facilitate and promote sustainable and responsible investing. Combined with Malaysia’s leading position in the global sukuk market, this framework will further enhance the country’s value proposition as a centre for Islamic finance and sustainable investments”, said Datuk Ranjit Ajit Singh, Chairman of the SC.

The SRI sukuk framework is an extension of the existing sukuk framework and therefore, all the other requirements in the Guidelines on Sukuk continue to apply. The additional areas addressed in the framework for the issuance of SRI sukuk include utilisation of proceeds, eligible SRI projects, disclosure requirement, appointment of independent party and reporting requirement.

The SRI sukuk framework is also intended to meet the demand of both retail and sophisticated investors for access to a wider range of investment products and to facilitate greater participation in the sukuk market. Further details of the additional requirements for the SRI sukuk are set out in the revised Guidelines on Sukuk, which can be downloaded here.