KUALA LUMPUR, Nov 29 (Bernama) -- Public finance alone is not enough to achieve low-carbon and climate-resilient economies, and hence, it must be complemented with private capital, said Securities Commission Malaysia (SC).
SC chairman Datuk Seri Dr Awang Adek Hussin said in his keynote address at the Global Green Finance Leadership Programme (GFLP) here today that the need for private capital was mainly due to the scale required to fulfil sustainable development goals (SDGs) and climate commitments. The event was organised by the World Bank.
Quoting a study, he said that about US$100 billion is required over three decades for Malaysia to achieve net zero by 2050.
“This is a sizeable sum to be directed to sustainable economic activities in support of transition goals and we are just talking about a single country, hence public finance alone is not enough.
"The SC recognised early on the need to fill this large financing gap as well as the enormous potential it offers," he said.
Therefore, Awang Adek said the SC has introduced various initiatives since 2014 to develop a facilitative ecosystem for sustainable responsible investment (SRI) in Malaysia to enable the domestic capital market to be part of the solution.
Meanwhile, in its Unleashing Sustainable Finance in Southeast Asia report, the World Bank said that the financial sector can play a critical role in supporting countries in their journey toward greater resilience and sustainability, but it must adapt to do so effectively.
This economic transformation will entail large-scale investments, requiring massive funding not only from the public sector but also via private financing initiatives, it said.
"Well-developed financial markets can catalyse large amounts of funds for climate change mitigation and adaption efforts.
“But for that to occur, sustainability considerations must become mainstream, entering the core of the decision-making processes of financial institutions," it said.
The bank said that developing financial systems for these goals entails addressing two interrelated challenges, namely, the management of climate risks to the financial sector itself and capital mobilisation for sustainable investments.
Accordingly, from the perspective of sustainable finance, Awang Adek said the SC is targeting to introduce principles-based SRI taxonomy for the Malaysian capital market by the end of this year.
He said the SRI taxonomy would provide guiding principles for economic activities that support environmental, social, and sustainability objectives.
Besides, the SC has also introduced the SRI-linked sukuk framework in June this year, enabling fundraising by companies to transition towards low-carbon activities and better sustainability practices.
Awang Adek said the pathway towards a better future for the planet is clear and it starts with us as stakeholders to take action.
"Therefore, all domestic and regional stakeholders must play their role in advancing the sustainability agenda.
"Our success is dependent on collective efforts to address multi-stakeholder challenges and growth impediments, and ensure an orderly transition," he said.
While it is undeniable that the journey towards low-carbon and climate-resilient economies will be costly for Southeast Asian countries, he believes it is a necessary burden for the greater good of future generations.
He said that Malaysia will certainly pull out all the stops to ensure the scaling up of sustainable finance.
“The SC is fully committed to continue with ongoing policies and measures to further deepen and broaden the domestic SRI ecosystem.
"Only through a transformational shift to climate action, as well as greater accessibility to sustainable finance, can we ensure that no individual - and business - is left behind in this net zero journey," he said.
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