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Sunday, December 10, 2023

Launch Partners

JC3 launches sustainable finance initiatives: BNM reviews regulatory framework

The Joint Committee on Climate Change (JC3), a joint initiative by Bank Negara Malaysia (BNM) and Securities Commission Malaysia, has launched a RM1 billion (US$209.62 million) portfolio guarantee scheme in partnership with Credit Guarantee Corporation Malaysia.

The scheme, which is one of several such efforts announced at the biannual JC3 climate conference on the 23rd October this year, will support the wider access to ESG financing for SMEs. Among the 18 banks participating in the program, several are Islamic.

Also announced was the ongoing regulatory review effort by BNM to ensure that the Malaysian banking and finance industry remains climate-resilient.

“The bank has begun undertaking a comprehensive review of our regulations to ensure climate risk is appropriately accounted for and well-integrated into our regulatory framework,” Abdul Rasheed Ghaffour, the governor of BNM, explained.

The regulatory review is notably in tandem with its ongoing review of its standards on Shariah contracts announced in September this year.

In a push to see at least half of the new financings by banks to be aligned with climate goals or transitioning activities by 2026, Abdul Rasheed shared that BNM will be advancing financing structures, with public–private partnerships and blended finance structures playing a more prominent role.

Before the end of the year, JC3 will also launch the third cohort of the VBI [value-based intermediation] Financing and Investment Impact Assessment Framework (VBIAF) sectoral guides. The VBIAF is a collaborative effort with the VBI Community of Practitioners, comprising 16 Islamic banks.

The JC3 also launched the Greening Industrial Parks initiative, which will include a green financing element. The initiative is a joint effort with the Malaysian Investment Development Authority, the Malaysian industrial research institute SIRIM and the Ministry of International Trade and Industry.

Concurrently, the conference saw the launch of the Centralized Sustainability Intelligence (CSI) Platform on Bursa Malaysia. The CSI will facilitate ESG disclosures aligned to the Task Force on Climate-related Financial Disclosures, the recently launched International Sustainability Standards Board standards and the Global Reporting Initiative standards on one platform.

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