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Malay Mail

KUALA LUMPUR, May 12 — The Joint Committee on Climate Change (JC3) aims to substantially complete further work to align practices in the implementation of the Climate Change and Principle-based Taxonomy (CCPT) by the end of 2023.

In a joint statement today, Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC) said supporting the credible, consistent and reliable implementation of the CCPT continues to be one of the key priorities of JC3, which is a platform established to pursue collaborative actions for building climate resilience within the Malaysian financial sector.

“Considerable variations in practice continue to be observed in the classification of assets and investments by financial institutions.

“Work by JC3 to publish guidance in the form of frequently asked questions or FAQs, expand use cases, and develop due diligence and screening criteria are helping to converge practices,” said the statement.

However, JC3 members noted that this needs to be complemented by further efforts to address prevailing data gaps and support capacity building within businesses themselves to assess the impact of their operations on climate outcomes and the broader environment.

JC3 convened its 10th meeting on May 9, 2023, to review developments in the financial sector’s ongoing response to climate-related risks and related initiatives supported by JC3.

The committee continues to actively engage and collaborate with relevant government ministries and agencies as well as industry associations to encourage greater alignment in the financial sector’s response to climate-related risks with national and business strategies.

At this meeting, members welcomed an exchange of presentations by the Ministry of Natural Resources, Environment and Climate Change and the Ministry of Economy on climate-related plans and timelines which provided the financial sector with a better understanding and appreciation of the government’s priorities.

In light of the upcoming release of the general sustainability-related (S1) and climate-related (S2) disclosure standards by the International Sustainability Standards Board (ISSB), JC3 said it will review the Task Force on Climate-related Financial Disclosures (TCFD) Application Guide for Malaysian Financial Institutions, which was published in June 2022, to take into account the requirements under these new standards.

As the ISSB Standards are aligned with TCFD recommendations, the Application Guide will continue to serve as a useful practical reference for financial institutions in Malaysia, particularly in supporting enhanced sustainability and climate-related disclosures.

Members also discussed updates on the implementation of three initial green pilot projects and several capital market initiatives supported by JC3 that aim to expand sustainable and transition finance.

The projects and initiatives focus on greening supply chains, scaling up green technology adoption in the agriculture sector, increasing climate resilience through parametric flood insurance and supporting the development of sustainable sukuk and bond markets.

SC managing director and co-chair of JC3 Kamarudin Hashim said as Malaysia transitions towards a low-carbon economy and a more sustainable future, it is critical that companies and financial institutions play their part to facilitate this transition together.

“JC3, through its initiatives, is actively exploring ways to assist companies to move towards a low-carbon economy in a just and orderly manner, while supporting financial institutions to accelerate capital allocation towards companies demonstrating credible climate transition pathways,” Kamarudin said.

As part of efforts to prioritise strategies and solutions that support the transition by small and medium enterprises (SMEs), an SME focus group has been established within JC3 to focus on raising awareness, reducing the cost of transition in the area of green certifications and facilitating better disclosures by these enterprises, he added.

BNM deputy governor and co-chair of JC3 Jessica Chew said about 60 per cent of SMEs believe that strengthening environmental, social and governance (ESG) practices can increase business opportunities and create long-term value, however, only 28 per cent of SMEs have adopted elements of ESG practices in their businesses.

“The formation of the SME focus group will enable JC3 to take a more focused and targeted approach in addressing the specific issues and challenges facing SMEs in order to close this gap,” she said.

JC3’s biennial flagship conference on climate change will take place in October 2023.

This regional conference will bring together a diverse range of climate experts, advocates, innovators and practitioners to discuss the practical applications of climate and nature finance, helping the financial sector and its customers move from theory to practice.

Further details on the conference will be made available to the public in due course. — Bernama

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