11/11/2022 11:29 AM

KUALA LUMPUR,  Nov 11 (Bernama) -- Capital Markets Malaysia (CMM) has organised side events at the 2022 United Nations Conference of the Parties (COP27) held in Sharm El Sheikh, Egypt, to showcase Malaysia’s experience in leveraging its Islamic capital market leadership to create innovative climate finance solutions.

In a statement, CMM, an affiliate of the Securities Commission Malaysia (SC) said it has organised engagements at the Malaysia Pavilion, hosted by the Ministry of Environment and Water Malaysia, as well as the UNDP Pavilion hosted by the United Nations Development Programme to attract greater international participation in Malaysia’s capital market.

"Senior representatives from the SC and Bank Negara Malaysia, financial sector leaders from Bursa Malaysia, CIMB Investment Bank, Maybank Investment Bank and HSBC Amanah Malaysia, as well as subject matter experts from the Sustainable Finance Institute Asia and Global Compact Network Malaysia and Brunei came together to showcase Malaysia’s experience in successfully harnessing Islamic finance to develop the country’s sustainable finance ecosystem," it said.

The global Islamic finance industry, with total assets of US$3.06 trillion (US$1=RM4.63) as of 2021, has the potential to contribute significantly towards the existing funding gap in meeting the UN sustainable development goals (SDGs), said CCM. 

"The synergies between Islamic finance and sustainable finance can be leveraged to foster a more sustainable and responsible capital market ecosystem and advance the global sustainability agenda."  

According to CCM, Malaysia’s Sustainable and Responsible Investment (SRI) journey started in 2014 with the launch of the SRI Sukuk Framework by the SC. 

This framework, a key driver in developing sukuk as a SRI asset class, has aided companies to raise funds for green, social and sustainability projects. 

"Malaysia now leads in sustainability sukuk issuance in ASEAN with 56 per cent market share of the total ASEAN sustainability sukuk issuance, as of November 2021.

"A steady increase in SRI sukuk issuances continues to support many environmental, social and governance (ESG)-centred projects including solar photovoltaic power plants, green buildings, hydropower, and affordable housing, enhancing Malaysia’s transition to a low-carbon economy," it added.

This year, the SC launched the SRI-linked Sukuk Framework to facilitate businesses in financing their transition towards achieving their sustainability targets, said CCM. 

The framework also expands the suite of SRI products offered through the Malaysian capital market, in line with growing global demand for sustainability-themed instruments such as sustainability-linked bonds.

By the end of the year, Bursa Malaysia will be launching the Shariah-compliant Voluntary Carbon Market exchange that will enable Malaysian companies to purchase voluntary carbon credits to offset their carbon emission footprint and to support financing for projects and solutions that reduce, remove or avoid greenhouse gas emissions.

The presence of enabling regulatory structures and private sector initiatives, particularly for Islamic SRI, has allowed the SRI segment to flourish in the country. 


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