Sustainability initiatives must not jeopardise interests of the poor, MSMEs

Tengku Zafrul said a greener economy does not equate to an exclusive club that only those with the resources to build the right capacity for compliance and regular reporting on sustainable initiatives can join. – Bernama photo

KUALA LUMPUR (September 21): The government is working hard to ensure that the transition to sustainability, whether through tax incentives, private sector initiatives, or financing and investment facilities, does not disenfranchise the poor or systematically exclude micro-small and medium-sized enterprises (MSMEs ).

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said a greener economy is not synonymous with an exclusive club that only those with the resources to build the right capacity for compliance and regular reporting on sustainable initiatives can join.

“If a ‘greener’ home is on the market, is it financially accessible to lower-income buyers? If compliance costs are too high, small and micro-enterprises can eventually be forced out of the market.

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“A just transition also requires that we give serious consideration to the potential loss of jobs through the operationalization of greener production or manufacturing techniques,” he said in his keynote address at the Cagamas Bhd: Developing and Financing Green Housing in Asia: here today conference .

Tengku Zafrul said the ministry recognizes that green finance can be a catalyst to drive green development.

“A case in point is the issuance of the world’s first US dollar-denominated sustainability sukuk by the Malaysian government in April 2021, valued at US$800 million, which was oversubscribed 6.4 times globally.

“Proceeds from the issue were used to fund sustainability-related programs and projects,” he said.

As announced in the 2022 budget, the minister said the government will spend up to RM10 billion of sustainability sukuk in ringgit, with proceeds going to similarly eligible social or environmental projects.

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Regarding the operationalization of Malaysia’s SDGs, he said that various efforts have started through the Ministry of Finance (MoF) ecosystem, including the launch of the enhanced Sukuk Framework for Sustainable and Responsible Investments (SRI-linked) by the Securities Commission Malaysia (SC ) to make it easier for companies to issue SRI-linked sukuk for the transition to low-carbon activities.

Another effort was demonstrated by the Joint Committee on Climate Change (JC3), co-chaired by Bank Negara Malaysia and the SC.

JC3 aims to accelerate the financial sector’s response to climate risks, as well as Bursa Malaysia’s proposed changes to its listing requirements, aiming to streamline sustainability disclosures for listed companies across all sectors in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD ) to improve. Application guide for Malaysian financial institutions earlier this year.

“The MoF has also introduced policies and measures to empower SMEs to adopt sustainable and low-carbon practices. These include measures such as the RM1 billion low-carbon transition facility through the 2022 budget.

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“Our government-related investment companies such as Khazanah Nasional, Permodalan Nasional Bhd (PNB), Employees’ Provident Fund (EPF) and Kumpulan Wang Persaraan (KWAP) have also started their respective sustainability journeys, particularly in terms of allocating more funding into sustainable assets and investments “, he said.

Meanwhile, Tengku Zafrul said the financial and investment ecosystem also has a key responsibility to help the government address certain structural issues and create balanced growth opportunities for all sizes of companies and walks of life.

Otherwise, he said, government could face unintended consequences that do not serve the sustainability and inclusion agenda in the long run.

“To that end, I expect that Cagamas and all industry players here will also play a key role in this space and become the catalyst to support not only the growth of green housing but also the inclusion agenda in Malaysia,” he added. – Bernama

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