KUALA LUMPUR (Sept 11): The capital market can be a major catalyst in the climate change transition by channelling investments into key sectors, such as renewable energy, green technologies and sustainable agriculture, said Securities Commission Malaysia (SC) chairman Datuk Mohammad Faiz Azmi.

He said Malaysia has one of the largest bond markets in the region, capable of meeting these needs, while also supporting small- and medium-sized enterprises (SMEs) in their sustainability efforts.

This ensures SMEs can access the financing and resources necessary to thrive in a low-carbon economy.

“In this regard, the SC’s principle-based Sustainable Responsible Investment (SRI) Taxonomy introduced in 2022 was one of the first taxonomies globally to include a social component, furthering the SC’s commitment towards a more holistic approach to sustainable and responsible investments,” he said during his keynote address at the National Climate Governance Summit 2024.

Mohammad Faiz emphasised that the capital market plays a crucial role in fostering economic resilience and providing capital for climate adaptation initiatives.

“This is normally the government’s responsibility but the private markets have a role to play, using a mixture of blended finance and other tools to make some of these projects bankable,” he added. 

Quoting Sultan of Perak Sultan Nazrin Shah from his speech at the SC-Oxford Centre for Islamic Studies (OCIS) roundtable in Oxford, United Kingdom last weekend, Mohammad Faiz said businesses must be part of the solution to global challenges.

“They must take responsibility for their broader impacts on the world around them, on their stakeholders, as well as shareholders - no longer able to dismiss these as being outside their primary profit-making functions.

“Mining companies must clean up when they leave a site. Agricultural companies must allocate land for protective buffers around waterways. The chemicals they use are now carefully monitored, and the workers applying these must have protective gear,” he said.

Meanwhile, Mohammad Faiz said that RM27.61 billion worth of SRI sukuk has been issued in Malaysia since the release of the SRI Sukuk Framework, funding a range of projects from renewable energy to affordable housing.

The SC recently introduced the principles-based Maqasid al-Shariah Guidance for the Malaysian Islamic Capital Market (ICM), while the Securities Industry Development Corporation (SIDC), the SC’s capacity-building arm, is leading efforts to educate and empower market participants on SRI practices.

The theme of the National Climate Governance Summit 2024 is “Capital Markets Supporting a Smooth and Just Transition”.

https://www.theedgemarkets.com/node/726399