Towards Greening the Financial Sector
25 February 2021  |   Kuala Lumpur

The Joint Committee on Climate Change (JC3) held its fourth meeting on 24 February 2021 to discuss its priorities for 2021 in supporting the financial industry’s response to climate-related risks. JC3 recognises the urgency for the financial institutions in Malaysia to accelerate efforts to manage these risks.
In 2020, the JC3 sub-committees completed a number of key initiatives, including the broad-based consultation and pilot implementation of the Climate Change and Principles-Based Taxonomy (CCPT) developed for the financial institutions, a stock-take on disclosure practices of selected financial institutions in Malaysia against recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) and a gap analysis on the green finance landscape. Financial institutions licensed by BNM will begin capturing exposures based on the CCPT for internal risk management and supervisory purposes over the course of 2021.

The JC3, together with its knowledge partners also developed and organised several foundational and outreach programmes in 2020, as part of its holistic approach in building the industry’s capacity and raising awareness of relevant stakeholders on climate change, its impact and need for climate actions.

For 2021, JC3 will build on these initiatives to further strengthen the financial industry’s capacity in managing climate-related risks, and enhance its role in scaling up green finance. The Committee’s priorities include:

  1. developing guidance documents on risk management and scenario analysis. This will complement the CCPT and advance climate risk management and stress testing practices in the financial sector.
  2. supporting the voluntary implementation of climate-related disclosures that are aligned with TCFD recommendations. This includes working with the industry to contextualise the recommendations to the Malaysian economy and financial system, and develop practical resources to help firms that interact with financial institutions improve their disclosures.
  3. broadening engagements with relevant stakeholders, including Government agencies, institutional investors and market intermediaries to identify and address enabling conditions for the structuring of green financial products and solutions.
  4. deepening technical capacity building programmes, focusing in particular on strengthening the practical knowledge and tools to support climate-related disclosures, climate risk management and climate scenario analysis. JC3 will also organise a follow-up flagship event to the 2019 Regional Conference on Climate Change (the inaugural event that launched JC3) in the second half of the year.
JC3 further agreed to establish a dedicated data workstream to identify crucial climate and environmental-related data and the relevant data sources, as well as solutions to bridge the data gaps. The work of the data workstream will also contribute towards more consistent implementation of the CCPT.

Further to earlier commitments made to work towards wider adoption of TCFD recommendations, JC3 members are stepping up efforts to implement TCFD disclosures in phases beginning this year. Members also agreed to identify specific business initiatives that support sustainable activities and pursue the adoption of internal financial targets for sustainability-related loans and financing, and assets under management.

SECURITIES COMMISSION MALAYSIA
BANK NEGARA MALAYSIA

SC-World Bank-IOSCO Asia Pacific Hub Conference 2019: Enhancing Financial Inclusion through Islamic Finance and FinTech
(From left to right):
  1. Abayomi A. Alawode, Head of Islamic Finance, Finance, Competitiveness and Innovation, The World Bank Group
  2. Datuk Syed Zaid Albar, Chairman of the Securities Commission Malaysia (SC)
  3. Dr. Firas Raad, Country Manager for Malaysia, East Asia and Pacific, The World Bank Group 
  4. Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive of SC
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