KUALA LUMPUR: The Securities Commission Malaysia (SC) today launched the Sustainable and Responsible Investment linked (SRI-linked) Sukuk Framework to facilitate fundraising by companies in addressing sustainability concerns.
The new framework, an extension of the initiatives under the SRI Roadmap that was introduced in 2019, would act as the guiding principles in addressing sustainability concerns on climate change or social agenda, with features that relate to the issuer's sustainability performance commitments.
The SC said that with the accelerated shift towards developing a climate-resilient future, high-emitting industries are at a high risk of being phased out.
The SRI-linked sukuk will enable companies in these as well as other industries to transition into a low-carbon or net zero economy.
Executive chairman Datuk Dr Awang Adek Hussin said the framework will encourage greater mobilisation of private sector and issuers' financing towards sustainable development and meet the increasing global demand for sustainable financing.
"This is in line with the initiatives outlined in the Capital Market Masterplan 3 to reinforce Malaysia's value proposition as the regional centre for shariah-compliant SRI," he said in a statement.
According to the statement, the global sustainable bonds outstanding exceeded US$1 trillion with sustainability-linked bonds making up US$118.8 billion, as at Dec 31, 2021.
Under the framework, the proceeds raised can be utilised for general purpose, subject to the issuer committing to future improvements for sustainability outcomes within a predefined timeline, which will be monitored using key performance indicators.
The framework also provides greater transparency for investors by requiring issuers to appoint an external reviewer before issuance and an independent verifier post-issuance to assess compliance with the framework and the issuer's sustainability performance which can be tracked by investors.
Further details of the requirements for the SRI-linked sukuk are set out in the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework and the Guidelines on Issuance of Corporate Bonds and Sukuk to Retail Investors, which can be downloaded at https://www.sc.com.my/regulation/guidelines