KUALA LUMPUR, June 27 — Banks in Malaysia have a critical role in shaping the environmental, social, and corporate governance (ESG) investment agenda, not only in terms of operations but also in how it affects customers and stakeholders and the wider financial ecosystem.

The chairman of the Association of Banks in Malaysia (ABM) Datuk Khairussaleh Ramli said the growth rate of ESG investing is accelerating, with global investment flows toward energy transition reaching US$1.1 trillion in 2022, up over 30 per cent from the previous year.

"Banks have a huge responsibility to realise a ‘just transition’, not only for ourselves but for the customers and communities we serve. And this is a journey.

"This requires concerted efforts as we are still unearthing new information that can influence the path toward our net-zero goals,” he said at the Second Malaysian Banking Conference 2023 (MBC2023), jointly organised by the Asian Institute Chartered Bankers (AICB) and ABM.

Just Transition is a "vision-led,” unifying, and place-based set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

During the media roundtable session, Maybank Investment Bank (Maybank IB) chief executive officer Datuk Fad’l Mohamed said that sustainable finance taxonomies are tools that help investors understand whether an economic activity is environmentally sustainable in the transition to a low-carbon economy.

"Taxonomies can take various forms. Some examples include the traffic light system, which classifies activities as green, amber, red, and brown. Others are principle-based, which provides common guiding principles on the classification while criteria-based can be quantitative, for example, absolute and relative performance thresholds.

"There have been significant developments relating to transition finance in the past six months. During this period, several taxonomies have been developed at both local and regional levels.

"These taxonomies are providing more standardised benchmarks to guide investors who are now able to better understand what the best practices should be and how to avoid investing in greenwashing activities,” he added.

Fad’l said he hopes there would be clearer sector-specific thresholds for all sectors so that investors could invest in transition finance with greater confidence, as well as for issuers so that they would be able to align their own practices to the recommended low carbon standards, thresholds, and phase-out dates.

As part of Maybank Group, Fad’l said the investment bank supports the commitment to mobilise RM80 billion in sustainable finance by 2025. As of December 2022, the group has mobilised RM34.37 billion in sustainable finance, he noted.

In terms of education and training, the Asian Institute of Chartered Bankers (AICB) said it would continue to nurture a sustainable pipeline of competent bankers to strengthen the banking industry.

Chief executive Edward Ling said through the continuous effort with its partners, the institute will focus its efforts to further build banking capability and offer highly relevant professional programmes to the market.

"We are looking to develop more certificates in the area of green banking and sustainability following members’ and industry’s needs. We understand the time constraint of attending a course for a year or six months, therefore, we also organised other talk leadership initiatives via other platforms including webinars, seminars and workshops,” he added.

Ling said as a professional body, AICB is also working closely with banks’ learning and development departments to look into the needs of employees and how AICB could further support personal development, especially in the ESG area. — Bernama