Keynote Address at the CEO Action Network (CAN) CEO and CFO Roundtable with A4S

Speaker: Dato’ Mohammad Faiz Azmi, Chairman, Securities Commission Malaysia

Location: Kuala Lumpur
Delivered: 4 March 2025

Yang Berusaha Encik Novan Amirudin, Group CEO, CIMB Group Holdings,

Yang Berusaha, Mr Gurdip Singh Sidhu, CEO, CIMB Bank,
Brad Sparks, Executive Director, Accounting for Sustainability,
Distinguished guests, ladies and gentlemen.

Assalamualaikum warahmatullahi wabarakatuh, and a very good afternoon.

First, I would like to thank CIMB for the invitation to deliver the keynote address for the CEO Action Network (CAN) CEO and CFO Roundtable with Accounting for Sustainability or A4S. A catchy name.
Perhaps it is by design, or a mere coincidence, that this Roundtable takes place at the start of the holy month of Ramadan. Why this matters is that I find the inclination towards self-reflection the highest, during this period.
Ramadan also reinforces the ethos of self-discipline, charity, and empathy for the less fortunate. These communal principles are also values championed by the sustainability agenda.
For instance, the act of fasting provides us practical examples of being sustainable. We practice restraint in terms of cutting down on unhealthy habits like smoking and living excessive lifestyles. Fasting also reminds us about hunger and deprivation, teaching us to not waste food and to appreciate what some of the most unfortunate have to endure in their daily lives.
Do you know that Malaysia ranks fourth in Southeast Asia for food wastage, with an average of 81 kilograms of food discarded per person annually¹? This has implications in terms of climate change. Why? Food loss and waste generate 8-10% of yearly methane or greenhouse gas emissions. This is nearly five times the emissions² of the aviation industry.

Setting the scene

At the Securities Commission Malaysia (SC), we have been taking the topic of being sustainable very seriously over the last few years. It is in our Malaysian Code of Corporate Governance, our SRI Sukuk criteria’s, our work with Bursa on ESG disclosures, it was embedded in our Islamic point of view in Maqasid al-Shariah, the appointment of our Chief Sustainability Officer and more recently the application of the ISSB standards on all listed companies over the next 3 years.
On ISSB, we have joined more than 30 jurisdictions to commit to adopting or take steps towards using, a common global language for sustainability reporting when Malaysia introduced the National Sustainability Reporting Framework (NSRF) in September last year. Given the issues Europe now has with their own disclosure standards, the choice of ISSB as a standard was correct.

Importance of Collaboration and Industry Readiness

Addressing these challenges in implementing the ISSB standards, calls for continuous dialogue and collaboration between regulators, businesses, and market intermediaries towards building a supportive ecosystem for accurate and meaningful sustainability reporting.
The Advisory Committee on Sustainability Reporting (ACSR), chaired by the SC, has introduced PACE (Policy, Assumptions, Calculators, Education) - an initiative offering training, tools, and resources to help companies meet NSRF requirements and adopt the ISSB standards.
Under PACE, the Interoperability Module we have developed is expected to bridge the use of the Global Reporting Initiative (GRI) with IFRS Sustainability Disclosure Standards to enhance consistency in reporting. This is because many companies in Malaysia already use GRI as their main framework for sustainability reporting.
Furthermore, the ACSR will introduce Industry Specific Illustrative Sustainability Reports later this year. This will provide companies with reference materials to guide their sustainability disclosures.
In addition, the ACSR released ‘Navigating the Transition: A Guide for Boards’ in January this year. This guide offers simplified and actionable steps for directors on the governance, sustainability data boundaries, financial impact assessments, and integration with enterprise risk management systems.
I would encourage your organisations to use these various tools to smoothen your sustainability journey and transition. We also welcome your feedback on the effectiveness of these tools.
These steps are important as it helps with ensuring our companies in the capital market are more resilient and sustainable. That People and Planet are as important as Profit. And ultimately people will be able to retire from the profits generated by these companies. We all hope to have 6.3% dividends every year to help with our retirement.
However, these steps are not nearly enough as it looks more to corporate resilience and sustainability, not the country as a whole. Our government has a role to play and has ambitious plans to move to Net Zero by replacing some 80% fossil fuels used in Semanjung electric power, down considerably in the next 25 years and bringing in a Carbon Tax framework to tax the polluters. We are also drawing up a National Adaptation plan to assess where the vulnerabilities are and what needs to be done. Although these initiatives are led by the government, what can the capital markets do to help fund these initiatives?
While government is doing this, in the ASEAN region, the SC is also leading the way as the 2025 ASEAN Capital Markets chair.

Mitigation Adaptation Resilience and Sustainability Financing (MARS)

Last month in February, the ASEAN Capital Market Forum chairpersons, sat together in Penang to approve what our 2025 initiatives would be. Two initiatives Malaysia are driving, that are worth highlighting, are MARS and VCM.
MARS stands for Mitigation Adaptation Resilience and Sustainability Financing. So, the context to the need for a MARS initiative, was a chance comment by a Lahore court judge at a recent conference I attended, who made the point that we in the Global South didn’t create the emissions problem but are the ones who will suffer the most. He mentioned Pakistan had floods two years ago causing US$10 billion worth of damage and even now, they have not fully recovered.
Nearer to home BNM estimated in a report in 2023, that 85% of natural disasters hitting Malaysia since 2000 were due to floods. The number of displaced people and economic impact does have an impact on Malaysia’s GDP and does test our resilience and ability to recover from such disasters. The report posed two scenarios that if we are hit by a one-in-20 year flood, the impact could be as much as 4.1% of GDP. Another scenario stated that with some adaptation efforts, we could reduce the impact by 40%. Still large numbers.
Just to add, the floods in Malaysia in 2021 caused RM6.1 billion worth of losses and recently in 2024 it caused losses of about RM1 billion.
So MARS is a derivative Taxonomy of the ASEAN Taxonomy, that focuses on raising climate mitigation and adaptation financing in ASEAN. The reason is many of these adaptation projects like sea walls, coastal reservoirs and flood mitigation, do not generate commercial returns that can fund these projects easily. So, we need some form of financial engineering and widening pools of investors, to fund these projects.
Globally, the estimate for adaptation financing is in the region of US$215 billion to US$387 billion a year.

Voluntary Carbon Markets (VCM)

The last area to touch on is the voluntary carbon markets or VCM. As you know, Bursa has already launched its own Bursa Carbon Exchange. Many of my ASEAN counterparts have similar organisations in their territories. However, the desired outcome, being properly priced carbon credits, is still elusive.
Last year in November, IOSCO issued a paper to all capital market regulators called the Final Report on Promoting Financial Integrity and Orderly Functioning of Voluntary Carbon Markets. This report had many recommendations key of which was that we should regulate carbon credits as they are tradeable financial assets.
This year, ASEAN regulators are drawing up common principles and expectations that we hope, will better govern such products in ASEAN and ultimately, provide better value to those seeking funds from offsets and carbon credit programmes. The principle is, polluters must pay, and they must pay well.

Closing

Today’s roundtable is an opportunity to hear feedback from industry leaders on the SC’s efforts both here and in ASEAN, on sustainability.
I also hope today’s discussions will provide greater insights into global best practices in sustainability reporting, and possibly, identify practical solutions to overcome the challenges I have shared. As our leading corporate captains, you have the responsibility to lead the charge.
In closing, I would like to reiterate that sustainability is an investment, not a cost. It is an investment towards the future wealth and resilience of our nation.

Thank you.

Source: 2024 Food Waste Index Report, United Nations Environment Programme (UNEP). Laos (89 kg), Thailand (86 kg) and Cambodia (85 kg) rank higher.
Source: United Nations Framework Convention on Climate Change (UNFCCC)