Bank Negara Malaysia (BNM) expects half of new financing by banks to be aligned with green climate policies by 2026, the central bank’s governor Datuk Abdul Rasheed Ghaffour said at a conference last week.
In his address at the joint committee on climate change conference (JC3), Ghaffour affirmed the central bank’s commitment to facilitate the transition to a net-zero economy.
As climate change has intensified, countries like Malaysia have been at higher risk of increased drought and floods. The country has witnessed half a million climate-related displacements, and 25% of Malaysia’s population could be displaced due to climate change by 2030, Ghaffour said.
“More than ever, climate change is hitting closer to home. And issues affecting the climate and economy are increasingly connected,” he said.
BNM will provide a policy environment to advance financial innovations and explore financial structure to meet climate risk mitigation and adaptation finance needs, he said. In addition, the bank is undertaking a review of its regulations “to ensure climate risk is appropriately accounted for and well-integrated into our regulatory framework”.
To support the transition, the BNM is developing transition plans to promote alignment between financial institutions, their public commitments and safeguarding against greenwashing.
In addition, BNM plans to work with ministers, agencies and committees to improve the availability and accessibility of climate-related data.
“I believe the case for climate is no longer in question,” Ghaffour said. “The financial industry has made good strides to rise to the challenge. But much, much more is needed – both to close pre-existing gaps, and to move us meaningfully forward. We know the perils of complacency and the rewards of climate action. The clock now ticks urgently for our response.”
During the conference, the JC3 announced a series of initiatives to help expedite the transition of businesses and farmers towards a low-carbon economy, including public and private collaborations. These include green industrial parks, a greening value chain program, an RM1 portfolio guaranteed scheme for ESG financing, and an online portfolio for small and medium-sized enterprises to jumpstart sustainable practices.
BNM is also planning to conduct a climate risk stress test in 2024.
This page was last updated October 31, 2023
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