YBhg. Dato’ Zainal Abidin Putih, Chairman of the Financial Reporting Foundation (FRF);

YBhg. Datuk Mohd Nasir Ahmad, Chairman of the Malaysian Accounting Standards Board (MASB);

Mr Ravi Abeywardana, Technical Director of the International Sustainability Standards Board (ISSB);

Ladies and gentlemen,

Assalamualaikum and a very good afternoon.

First, I would like to thank the MASB for inviting me to be part of this outreach session on the ISSB’s proposed standards in relation to general sustainability-related as well as climate-related disclosures.

This opportunity for key stakeholders to engage directly with the ISSB as well as the Value Reporting Foundation will certainly be useful in informing our respective reviews and response to the ISSB on the proposed standards.

Discussions on the proposed standards are already underway between the Securities Commission, Bank Negara Malaysia, Bursa Malaysia and the MASB. The SC is also participating in the International Organization of Securities Commissions’ (IOSCO) review of the ISSB’s proposals, and on the local front via the Joint Committee on Climate Change (JC3) which the SC co-chairs with Bank Negara, to examine the drafts from the perspective of financial institutions.

This initiative will also inform the design of sustainability reporting frameworks across markets, including for issuers listed on Bursa Malaysia (Bursa). Bursa is currently in the process of enhancing the sustainability reporting framework and the enhancements will be designed to align with the global direction on sustainability reporting.

Ladies and gentlemen,

If I may quote a remark made by Emmanuel Faber, the Chair of the ISSB, in a recent interview with Bloomberg on sustainability disclosures, “Capital markets today do not count everything that counts”.

In recognition of that challenge, the ISSB is now spearheading the development of a global baseline of sustainability reporting standards, an effort which has received wide support, and the SC echoes this support.

A shared purpose around sustainability is visibly on the rise across markets, guided – among others – by the Sustainable Development Goals, and reflected in the growing coalition of countries, cities, businesses and institutions pledging to get to net-zero emissions. Last year, Malaysia announced our pledge to become a carbon-neutral country by 2050 at the earliest, and at COP26 we updated our Nationally Determined Contribution to reduce GHG emission intensity by 45%, based on GDP, vs. the earlier target of 35% (NDC 2015) by 2030.

So how do capital markets fit into the achievement of these goals? For one, the flow of financing will need to be consistent with the pathway towards low greenhouse gas emissions and provide investments into solutions that will accelerate the transition to this pathway. Making informed investment decisions, including for sustainable and responsible investment (or SRI), will require reliable and comparable information. Access to such information will also address and mitigate greenwashing risks, thus reinforcing the integrity of sustainability-related investments, which in turn will promote a virtuous cycle.

The urgency for access to the relevant information has only increased as the SRI segment and the sustainability ecosystem continue to grow, particularly following the onset of the global COVID-19 pandemic. The issuance of Green, Social, Sustainability, Sustainability-Linked and Transition (GSS+) themed debt instruments¹ rose to almost USD1.1 trillion in 2021, demonstrating a 57% increase from 2020². Meanwhile, global sustainable fund assets amounted to USD2.74 trillion in Quarter 4 2021³, compared to USD2 trillion in Quarter 1 2020, driven by heightened attention by investors towards ESG considerations.

Amidst this significant growth, recent deliberations including at the COP26, the IPCC reports and others, have highlighted the pressing importance of a global, whole of society approach in addressing the monumental challenges posed by climate change and related risks. This initiative undertaken by the ISSB therefore is crucial in facilitating the global flow of capital to support the collective achievement of the SDGs.

Investors can and should be catalysts for positive change, and to do that they need data and information that enable proper decision-making and monitoring in respect of their investment portfolios.

Ladies and Gentlemen, 

I do not wish to take too much time away from the main objective of this outreach session this afternoon, so please allow me to conclude my remarks with the outcomes we hope to achieve through the collective efforts on sustainability, which also forms one of the thrusts of the Capital Market Masterplan 3, that is, for businesses to create value for society and the environment besides serving their shareholders – a meaningful reset for stakeholder capitalism. The proactive management of material sustainability risks and opportunities, and meaningful reporting on the same is essential in supporting this reset, where businesses decouple profit and growth from environmental degradation, increase resource efficiency, and simply ‘do more and better, with less’.

It is therefore incumbent upon all of us to ensure we provide constructive and relevant feedback on the exposure drafts so that the eventual standards serve the needs of all stakeholders, as much as possible.

On that note, I would like to thank once again the MASB for organizing this session and to the ISSB for supporting this engagement. I wish all of you a productive and insightful session.