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Tuesday, June 18, 2024

Launch Partners

PODCAST: Securities Commission Malaysia mulls further sustainable finance requirements

The sustainable finance space is beginning to mature and, with that, new regulations are being introduced. ISFI spoke to Salmah Bee Mohd Mydin, the executive director of market development responsible for sustainability from the Securities Commission Malaysia (SC), on the SC’s role in aiding the smooth implementation of sustainability regulations in Malaysia.

The SC is looking at the structures that are being developed surrounding sustainable finance and seeing if the needs of the industry are being met by the present guidelines and if they need to be enhanced, Salmah told ISFI.

In addition to the Plus Standards for the SRI Taxonomy, which are expected to be issued next year, the SC is looking at broadening the definition of sustainable investments to meet the growing need of fund and asset managers.

“The funding and investment framework could come through the SRI Fund Guidelines or the SRI Sukuk [Framework],” Salmah shared.

According to Salmah, fund and asset managers are making commitments toward ESG investments and, as such, the SC will adapt its regulatory requirements on fund disclosures as they come out. It is also working on more innovative structures for blended finance and transition finance.

At a national level, while referencing and benchmarking against international standards are helpful as Malaysia is an open market, Salmah shared that the SC’s approach is to curate its regulations to cater to the specifics of the Malaysian market.

“I think benchmarking against global standards is an important area, but I think we are also mindful of the needs of the economy and the readiness of our market participants. That is an important factor that shapes the requirements when they are being developed,” Salma detailed.

Currently, the gap in sustainability data is one of the biggest challenges in developing the sustainable finance space. Additionally, the introduction of new regulations regionally and internationally may be contributing to reporting fatigue by corporates.

As part of its role to aid in the implementation of international sustainability standards, the SC set up the national-level Advisory Committee on Sustainability Reporting to support the implementation of the IFRS Sustainability Disclosure Standards in Malaysia in May this year.

In the SME space, the SC affiliate, Capital Markets Malaysia, has developed the Simplified ESG Disclosure Guide for SMEs to help them remain competitive regionally and internationally. The SME segment is one which the SC will continue to focus on in terms of standards clarification as well as capacity-building, Salmah shared.

This is an excerpt from an interview with Salmah Bee Mohd Mydin, the executive director of market development responsible for sustainability. Listen to the full discussion on IFN OnAir.

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