Welcoming Remarks at Launch of Sustainable and Responsible Investment Roadmap for the Malaysian Capital Market
26 November 2019  |   By: Datuk Syed Zaid Albar, Chairman, Securities Commission Malaysia
Welcoming Remarks by Datuk Syed Zaid Albar,
Chairman, Securities Commission Malaysia
at the Launch of Sustainable and Responsible Investment Roadmap for the Malaysian Capital Market
26 November 2019

Yang Berhormat Tuan Lim Guan Eng, Minister of Finance
Distinguished guests,
Ladies and gentlemen,

Assalamu’alaikum warahmatullahi wabarakatuh.

Introduction

1.

On behalf of the SC, welcome to the launch of the Sustainable and Responsible Investment Roadmap for the Malaysian Capital Market (SRI Roadmap). A very special welcome to our guest of honour, Yang Berhormat Finance Minister, who has been a strong proponent of sustainable finance. YB Lim, we are honoured by your presence here today.  Thank you for your enduring support of the market and industry, and for agreeing to deliver the keynote address this afternoon.

2.

Today’s theme “Sustainability” has become a mainstay in our daily lives. As we transition towards a carbon neutral and green economy, individuals and corporations globally are embracing more environmentally friendly and sustainable practices.

3.

However, economic progress means that our continued demand for resources, such as energy and food, will test business resiliency. External and internal pressures to consider environmental and social factors can only grow moving forward. It is an issue that corporate leaders and markets cannot ignore, as it directly impacts the bottom line.

4.

The United Nations Office for Disaster Risk Reduction estimated that the direct economic cost of climate-related disasters worldwide is close to $2.3 trillion over a 20-year period from 1998. Climate change can pose real physical and financial risks for companies if left unmitigated. In extreme circumstances, this may cause previously viable businesses to fold.

5.

The change to more sustainable practices and brands will require investments in new technologies and funding. From a business perspective, this carries risks with unclear outcomes.

6. This is why the capital market is uniquely placed to manage the transition to a sustainable economy. The market’s intrinsic role is, after all, to finance and manage business and investment risks. 

SRI Initiatives in the Malaysian Capital Market

Ladies and gentlemen,

7.

The SC is committed to creating a facilitative ecosystem, for mobilising investments into financing sustainable and inclusive development.

8. In fact, the Islamic capital market – where Malaysia remains a global leader – has long adhered to the values of societal accountability, shared benefits, and sustainable development. Given our deep expertise and experience in Islamic finance, Malaysia has a distinct edge in promoting socially beneficial and sustainable financial products.
9. The issuance of the world's first green sukuk in 2017 to finance a solar project earned Malaysia the World Bank's recognition as a pioneer in harnessing Islamic finance, for climate-friendly investments.
10. Guided by our 5i Strategy, the SC has taken a holistic approach to developing the SRI segment. The underlying motivation is provide greater options to both issuers and investors that suit their respective SRI needs and requirements. The strategy also recognises that an effective and facilitative regulatory framework is required to offer certainty and guidance to the industry. It does so while embedding accountability across various market stakeholders.
11. To widen the range of SRI products and attract investors to this segment, the SC issued the Guidelines on SRI Funds in 2017. To date, there has been a total of seven qualified SRI funds under the Guidelines.

SRI Roadmap

Ladies and Gentlemen,

12. Given favourable prospects for the SRI segment in Malaysia, its development must be carefully guided to ensure the segment's long-term vibrancy and sustainability. All stakeholders, including market participants, must also share common aspirations and objectives as we scale up the market. This is a lesson which we have learnt in building a globally-recognised Islamic capital market.
13. Hence, consultations with industry and other stakeholders are important from the onset. This approach is essential to cultivate a broad spectrum of ideas and expert views. The launch of the SRI Roadmap is the culmination of this multi-stakeholder approach towards charting the segment's strategic direction ahead.
14. We believe that the five overarching strategies and 20 recommendations identified in the SRI Roadmap will be pivotal in accelerating the growth of SRI domestically and regionally.
15. Suffice to say that we would like to see a diverse base of issuers, investors and market intermediaries develop and grow this asset class. Presently the bulk of SRI project financing revolves around renewable energy projects. We would certainly encourage more variety and innovative structures that leverage on the abundant resources Malaysia and the region have to offer.
16. The SC also looks forward to working closely with industry and our public listed companies (PLCs) to improve corporate sustainability practices, including green practices and sustainability disclosures. Corporate Malaysia must also take cognisance of and avoid the practice of greenwashing. They must be mindful of their social obligations, as well as their business impact on a wider constituency or group of stakeholders.
17. In the session later in the programme, the SC's Deputy Chief Executive will share the full details of the SRI Roadmap. For those interested in previewing the SRI Roadmap, do note that, in line with practicing sustainable and green habits, you may use the QR code, which we will share and highlight, to download your own copies.

Moving Forward

Ladies and gentlemen,

18. The Malaysian capital market's journey to sustainability promises to be exciting and challenging in equal measure. Only time will tell whether the SRI segment will flourish as we envisioned. But I am comforted that, with the launch of the SRI Roadmap for the Malaysian Capital Market, we have the necessary ingredients for success. Its success will rely on the collective efforts of industry and various stakeholders, including the regulators, to bring SRI to the forefront.
19. I certainly look forward to the views of the panelists later on sensible and pragmatic means to uplift the SRI agenda, as well as creating a more responsible and sustainable business culture moving forward.
20. Before I conclude, I would like to thank everyone for their hard work and efforts in developing this Roadmap. The SC would like to put on record its deepest appreciation to all stakeholders that have contributed valuable feedback and time to make this a reality. To all of you here in the room, it is time to step up and put action to words.
21. On that note, let us now proceed to the next item in this afternoon's agenda. It is my distinct pleasure to invite YB Lim to the stage to deliver his keynote, and subsequently, launch the SRI Roadmap for the Malaysian Capital Market.
 
Thank you.
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