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Welcoming Remarks at the JC3 Journey to Zero Conference 2023
Speaker: Dato’ Seri Dr. Awang Adek Hussin, Chairman, Securities Commission Malaysia
Location: Sasana Kijang, Bank Negara Malaysia, Kuala Lumpur
Delivered: 13 October 2023

Key Highlights

In his address at the JC3 Journey to Zero Conference 2023, Dato’ Seri Dr. Awang Adek Hussin, Chairman of the SC urged the capital market industry in Malaysia to take advantage of the various initiatives that have been introduced in Malaysia and ASEAN. Given the huge financing requirement for sustainable development, the capital market must continue to facilitate financing for investments in key areas.

Here are highlights from his Welcome Remarks:

  1. The capital market should be ready to facilitate the fund raising and investments to achieve sustainability and climate goals.
  2. To realise the energy transition alone, RM1.3 trillion is needed until 2050.
  3. Almost RM21 billion of SRI sukuk has been issued, with more than 20 percent raised to finance renewable energy projects.
  4. Over 9,000 MSMEs have raised more than RM5.4 billion through ECF and P2P financing, with some portion allocated for renewable energy and other environmentally-friendly projects.
  5. The SC is working on the next iteration of the SRI Taxonomy to provide greater guidance to the industry.
  6. The Simplified ESG Disclosure Guide for SMEs in Supply Chains launched by Capital Markets Malaysia will help SMEs adopt sustainability reporting by providing practical, structured guidance on the ESG disclosures expected of SMEs within the supply chains.
  7. The ACMF has endorsed the ASEAN Transition Finance Guidance, and an initial report on the overall state of development of voluntary carbon markets in ASEAN.
  8. The ACMF has also endorsed a handbook to facilitate the cross-border offerings of ASEAN Sustainable and Responsible Funds.


Full Speech:
YB Tuan Nik Nazmi bin Nik Ahmad, Minister of Natural Resources, Environment and Climate Change of Malaysia,

Datuk Abdul Rasheed Ghaffour, Governor of Bank Negara Malaysia,

Your Excellencies,

Distinguished Guests,

Ladies and Gentlemen,

Assalamu’alaikum warahmatullahi wabarakatuh, and a very good morning.

Introduction

  1. On behalf of the Securities Commission Malaysia, I would like to join Bank Negara Malaysia in welcoming everyone to the JC3 Journey to Zero Conference 2023. Building on the inaugural flagship event in 2021, this year’s conference is pivotal to moving beyond awareness towards action in addressing climate change and environmental sustainability.

Accelerating Action to Address Climate Change

  1. As we all know, climate change has resulted in an increasing number of natural disasters. The world is beset with severe floods, wildfires and other calamities, a glaring reminder of the global impact of climate change.
  2. Temperatures will likely rise by 1.5 degrees Celsius between 2021 and 2040. We can only mitigate this warming of the globe by taking immediate and urgent steps to cut greenhouse emissions.
  3. According to the World Health Organization, climate change is expected to cause 250,000 more deaths each year between 2030 and 20501. Without more ambitious climate action, human lives and livelihoods would suffer greatly.
  4. A United Nations Intergovernmental Panel on Climate Change study suggests that we need to cut global greenhouse gas emissions by 43 percent in the next seven years to reach net zero by 20502 .
  5. However, current mitigation pledges fall well short of achieving anything significant. None of the world’s biggest polluters have reduced their emissions enough to meet this goal. We are behind schedule, and we need to step up our efforts.
  6. As the problem is global, it is not enough for countries to take action locally without considering how it ties in with the whole.
  7. Although more countries and companies are committing to net zero by 2050, few have made concrete plans on how they plan to go about it.
  8. We need to start turning commitments into actions, and actions into outcomes.
  9. The world is gearing up for COP28 later this year. World leaders will be discussing two questions: Where are we with regards to emission reduction? And what steps must be taken to ensure this happens?
  10. The answer to the first question is obvious: we are far from where we need to be. As a result, the focus must shift to the second question: what more can we do?

Ladies and Gentlemen,

The Role of the Financial Sector in Supporting Government Priorities

  1. It is encouraging to see the Malaysian Government adopting a ‘whole of nation’ approach to addressing the impact of climate change on economic sustainability. The relevant ministries have released roadmaps and masterplans which outline the country’s sustainable development strategies and priorities.
  2. Considering the huge financing requirement, the financial sector, particularly the capital market, must continue to facilitate financing and investments in these key areas to support the Government’s priorities. To realise the energy transition alone, we need RM1.3 trillion between now and 2050.
  3. The capital market should be ready to facilitate fund raising and investments to achieve sustainability and climate goals. The SC has paved the way for sustainability from 2011, when Sustainable and Responsible Investment (SRI) was embedded in the Capital Market Masterplan CMP2 as a key growth strategy.
  4. Under CMP3 and the SRI Roadmap, the SC continues to develop a robust SRI ecosystem in Malaysia. This includes introducing innovative capital market products to meet the diverse needs of businesses and investors.
  5. Since the SC introduced the SRI Sukuk Framework in 2014, almost RM21 billion of SRI sukuk has been issued, with more than 20 percent raised to finance renewable energy projects.
  6. With the introduction of the SRI-linked Sukuk Framework last year, the Malaysian capital market has a complete suite of frameworks to help companies tap into the sukuk market not just for financing green, social and sustainability projects, but also for transition purposes.
  7. For smaller scale financing, equity crowdfunding (ECF) and peer-to-peer (P2P) financing platforms have helped SMEs reach untapped investor pools. These channels are also cheaper, faster, and more convenient. As of June, over 9,000 MSMEs had raised over RM5.4 billion through ECF and P2P financing, with some going towards green projects.
  8. Last year, the SC introduced the SCxSC3  GROW, to encourage wider adoption of financial technology (fintech) in agriculture so that the country's food security agenda can be better met.

  1. As sustainable investments continue to grow, a more systematic classification system is also needed to facilitate comparability and their alignment with environmental, social and sustainability goals.
  2. The SC introduced the Principles-based SRI Taxonomy for the Malaysian Capital Market at the end of last year to achieve this. We are now working on the next iteration of the SRI Taxonomy that will provide greater guidance to the industry.
  3. Last week, the ASEAN Capital Markets Forum (ACMF) in Bali endorsed the ASEAN Transition Finance Guidance, and an initial report on the overall state of development of voluntary carbon markets in ASEAN. This report was developed under the SC’s Co-Chairmanship of the ACMF Sustainable Finance Working Group.
  4. The ACMF also endorsed a handbook to facilitate the cross-border offerings of ASEAN Sustainable and Responsible Funds.
  5. These initiatives mark the continued commitments of ASEAN securities regulators to develop a sustainable capital market in the region. I urge the capital market industry players in Malaysia to take advantage of the various initiatives that have been introduced in Malaysia and ASEAN, and step up their efforts in championing sustainable finance.

Ladies and Gentlemen,

Transparency of Sustainability Information

  1. To facilitate fund raising, disclosure and reporting will be important. Reliable and comparable sustainability-related information is essential to support the design of strategies, action plans and capital allocation decisions.
  2. The SC welcomed the International Sustainability Standards Board (ISSB) inaugural standards issued in June this year. These standards provide a global baseline of sustainability-related disclosures for the capital markets. The SC, with endorsement from the Ministry of Finance, has set up a national level Advisory Committee on Sustainability Reporting (ACSR) to support the implementation of the ISSB Standards in Malaysia.
  3. And to ensure that no one is left behind, we must include SMEs in this journey. SMEs in Malaysia generate more than 38 percent of our GDP and employ more than 48 percent of the workforce4. This makes them critical players in realising the nation’s sustainability agenda.
  4. SMEs are faced with growing pressure to measure and manage their ESG risks, particularly those that are part of the global supply chain. To help SMEs adopt sustainability reporting, Capital Markets Malaysia, an affiliate of the SC, launched the Simplified ESG Disclosure Guide for SMEs in Supply Chains last week. This guide provides practical, structured guidance on the ESG disclosures expected of SMEs within the supply chains.

Ladies and Gentlemen,

Closing

  1. In closing, I would like to reiterate that our planet is facing an unprecedented challenge, one that demands urgent and concerted effort from all nations, industries, and individuals.
  2. I would like to express my appreciation and gratitude to all the distinguished speakers, panelists, and all of you for your dedication to this cause.
  3. With that, thank you, and I wish all of you an insightful and productive conference ahead.
  1. World Health Organisation
  2. United Nations Framework Convention on Climate Change
  3. Synergistic Collaboration by the SC
  4. SME Corporation Malaysia
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