Opening Remarks at the World Bank and Capital Markets Malaysia Sustainable Exchange Development Series (SEEDS) 2021
25 October 2021  |   By Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive, Securities Commission Malaysia
World Bank and Capital Markets Malaysia
Sustainable Exchange Development Series (SEEDS) 2021
Developments in Sustainable Finance in ASEAN
Opening Remarks
Datuk Zainal Izlan Zainal Abidin
Deputy Chief Executive,
Securities Commission Malaysia
25 October 2021

Introduction

Assalamualaikum and a very good morning

Mr. Ndiame Diop – Country Director, Brunei, Malaysia, Philippines and Thailand, World Bank Group

DG Jessica Chew – Deputy Governor, Bank Negara Malaysia

Ladies and Gentlemen

1. I am pleased to be able to join all of you for this forum. For that, I would like to thank the World Bank Group for inviting me to share some of my views today.
A Sustainable ASEAN for All
2. As we move into the Decade of Action, ASEAN faces a critical challenge as it is one of the regions that is most vulnerable to the negative impacts of climate change1. A report by the World Meteorological Organisation has stressed that effective climate action is necessary to achieve the Sustainable Development Goals (SDGs) by 20302.
3. Given that climate change and sustainable development are highly interconnected, there is an urgent need to support a green recovery that achieves positive socioeconomic and environmental outcomes for a sustainable ASEAN.
4. A recent Deloitte report suggests that rapid decarbonisation to achieve a 1.5°C world could yield economic gains of approximately USD12.5 trillion (in present value terms) for South East Asia’s economy by 20703.
5. To do so, it is critical for every nation within ASEAN to mobilise capital to close the SDG financing gap for sustainable investments. Hence, I commend the World Bank Group for organising this timely Webinar Series to share knowledge and experiences in sustainable finance within ASEAN.

Malaysian Capital Market’s Perspective on Sustainable Finance

Ladies and Gentlemen,

6. Capital markets play a very important role in mobilising funds towards activities that promote sustainable development. A key approach by the Malaysian capital market has been to leverage on the synergies between Islamic Capital Market (ICM) and Sustainable and Responsible Investment (SRI) to scale up sustainable finance in Malaysia given the similarities in the values espoused by ICM and SRI. In this regard, a pioneering initiative was the development of the SRI Sukuk Framework, which facilitated the issuance of the world’s first green sukuk in Malaysia.
7. Subsequent initiatives sought to facilitate a holistic development of different components of the sustainable finance ecosystem in the Malaysian capital market, based on the Securities Commission’s 5i-Strategy, which encompasses (i) instruments; (ii) investors; (iii) issuers; (iv) internal governance culture; and (v) information architecture.
8. Building further upon these initiatives that have collectively created a firm foundation for the ecosystem, we will continue to focus on positioning Malaysia as a regional SRI centre as envisioned in the SC’s SRI Roadmap through operationalisation of its 20 recommendations. Our aspirations to scale up sustainable finance is also outlined in our recently-launched 5-year strategic blueprint, the Capital Market Masterplan 3 (CMP3).
9. One of our strategic priorities in the CMP3 is to facilitate financing for industries and businesses to transition to low carbon activities, which will enhance their relevance and competitiveness in a globalised market that is increasingly emphasising, and to some extent requiring, greater adoption of sustainable practices. The development of transition financing is therefore essential, and the SC is actively assessing opportunities to further broaden the range of capital market instruments that can serve this need.
10. Another important area for further development is sustainability disclosure. Timely, accurate and consistent disclosure of relevant information and data provides greater transparency and comparability, and facilitates better decision-making, which in turn can attract more capital to sustainable projects and businesses.

Achieving Sustainability Goals through Regional Collaboration

Ladies and Gentlemen,

11. Development of sustainable finance is a key priority for ASEAN capital market regulators. Following the introduction of the series of ASEAN Green, Social and Sustainability Bond Standards by the ASEAN Capital Markets Forum (or ACMF) in 2017 and 2018, the Roadmap for ASEAN Sustainable Capital Markets, launched by the ACMF, and the Report on Promoting Sustainable Finance in ASEAN, issued by the ASEAN Working Committee on Capital Market Development, last year, provide comprehensive recommendations on measures and initiatives to further develop the ecosystem for sustainable finance in ASEAN. A key initiative being undertaken currently is the development of the ASEAN Taxonomy for Sustainable Finance, which is a collaboration among capital market, banking and insurance sector regulators.
Conclusion
12. Malaysia is very much committed towards achieving the SDGs and climate goals. These commitments are also re-affirmed through the 12th Malaysia Plan, with a vision to achieve economic growth and transform Malaysia into a prosperous, inclusive and sustainable country.
13. To support this vision, there is still much more that needs to be done to accelerate the growth of sustainable finance in Malaysia, and likewise for the region. In tandem with this, efforts in related areas, such as the work undertaken by the Joint Committee on Climate Change (JC3) to build climate resilience within the Malaysian financial sector and promote climate action, will create mutually reinforcing benefits. Ultimately, all of us must play our part in ensuring that we collectively continue to strive towards achieving the sustainability goals. I am hopeful that we will see substantive progress in commitments being expressed at the upcoming COP26 by the various stakeholders, which will contribute significantly towards this goal.
14. In concluding, I would like to thank everyone for your kind attention, and wish you a highly productive forum this morning. Thank you.

1The Physical Science Basis, Intergovernmental Panel on Climate Change, Intergovernmental Panel on Climate Change’s Sixth Assessment Report Climate Change
2Climate Indicators and Sustainable Development: Demonstrating the Interconnections, World Meteorological Organisation, 22 September 2021
3Southeast Asia’s turning point: How climate action can drive our economic future, Deloitte Economics Institute, August 2021
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