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Saturday, May 25, 2024

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PODCAST: New SRI-linked Sukuk framework to aid companies achieve sustainability goals, says SC

The Securities Commission Malaysia (SC) launched the Sustainable and Responsible Investment linked Sukuk (SRI-linked) Framework on the 30th June 2022 as an extension of its initiatives under the SRI Roadmap to facilitate fundraising by companies in addressing sustainability concerns. ISFI spoke to Sharifatul Hanizah Said Ali, the executive director of Islamic capital market development at the SC, to learn more about this framework.

The SRI-linked Sukuk framework follows the Sustainable and Responsible Investment Sukuk Framework issued in 2014. The key distinguishing features of the two frameworks are the broadening of the use of funds in addition to the sustainability-linked performance feature in the new framework.

“It has features relating to the issuers’ sustainability or performance commitments. The highlight of this issuance is that it allows issuers to use the proceeds toward general corporate purposes. And the framework, in turn, provides guidance to issuers aiming to achieve their strategic sustainability goals,” Sharifatul shared.

“If you are able to meet your KPI [key performance indicator] and sustainability goals, your profit payment might reduce as an incentive for achieving that objective,” Sharifatul continued.

According to Sharifah, it was timely for the SC to broaden its SRI product offerings. The SC wanted to provide innovative solutions in support of the nation’s transition to a low-carbon economy, within the context of its ongoing efforts in sustainability guidelines and regulation.

In addition to the launch of the new framework, the SC has expanded the SRI Sukuk and Bond Grant Scheme, which was established in 2018, to include Sukuk issued under the new framework. The scheme will assist eligible issuers in defraying their external review cost.

This is an excerpt from an interview with Sharifatul Hanizah Said Ali, executive director of Islamic capital market development at the Securities Commission Malaysia. Listen to the full discussion on the SRI-linked Sukuk Framework on IFN OnAir.

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