MALAYSIA DOING RELATIVELY WELL IN DEVELOPING SUSTAINABLE FINANCE - WORLD BANK

KUALA LUMPUR, Nov 29 (Bernama) -- Malaysia is doing relatively well in developing sustainable finance and enabling policy frameworks compare with other ASEAN countries, said the World Bank Group.

World Bank senior economist (Finance Competitiveness and Innovation) Tatiana Didier said in terms of economic development, the country is spearheading change among the ASEAN-5 (Indonesia, Malaysia, the Philippines, Thailand and Vietnam) and among some of the other peer countries. 

“When it comes to developing sustainable finance, a lot of the building blocks are out there. 

“I think Malaysia should be showcased to the rest of the world,” she told reporters at the Global Green Finance Leadership Program (GFLP) Scaling-up Sustainable Finance in Southeast Asia here today.

Didier, who is based in the World Bank Inclusive Growth and Sustainable Finance Hub in Malaysia, said closing data gaps and enhancing information systems should be a policy priority, where an effective implementation of taxonomies and disclosure standards, with the ultimate goal of wider implementation across the private sector at large.

She added that disclosure is about market transparency, which would allow a proper risk assessment  among firms. 

Didier also said that despite rising interest rates amid inflationary pressure, prospects for sustainable financing remain favourable as policymakers exert great pressure to develop and enable policy frameworks.

According to the World Bank's Unleashing Sustainable Finance In Southeast Asia (SEA) report, taxonomy in the context of sustainable finance refers to definitions that provide a categorisation of specific sustainable investments or economic activities within it.

Taxonomies may allow policy makers to set some policy priorities by providing some guidance on where sustainable investments may be needed the most. 

The reports also revealed that the ASEAN-5 economies with relatively more developed sustainable financial markets - especially Malaysia - also tend to have more developed enabling policy frameworks. 

Malaysia released its principles-based approach for financial markets taxonomy in 2021, which considers the state of its own economic development and the early stage of adoption of climate risk management practices within the country, while allowing better alignment with international classification standards. 

Malaysia has also published a proposed capital markets taxonomy (Sustainable and Responsible Investment (SRI) Taxonomy issued by the Securities Commission) that is currently in its consultation phase, which has four major categories - environment, transition, social and sustainability - but also does not provide specific thresholds for the concerned sectors. 

-- BERNAMA