KUALA LUMPUR, Nov 27 — The Malaysian bond and sukuk market is well positioned to provide crucial financing towards productive and socially responsible initiatives, said the Securities Commission Malaysia.

Its chairman, Datuk Seri Awang Adek Hussin, said the Malaysian bond and sukuk market is one of the most developed and largest markets in the region with a total outstanding value of RM2 trillion as of Oct 31, 2023, representing more than 50 per cent of the Malaysian capital market.

"Malaysia is indeed the largest sukuk market with 35 per cent of global outstanding sukuk, ahead of Saudi Arabia and Indonesia.

"The country also remains the regional leader in sustainable and responsible investment (SRI) sukuk. In 2023 (up to October), three SRI sukuk with a total programme size of RM2.2 billion have been lodged with the SC,” he said in his keynote address during an online MARC Malaysian Bond and Sukuk Conference 2023 today.

Awang Adek also called for market players to take more concrete actions to address climate change and promote sustainability in Malaysia.

He noted that while governments worldwide have pledged to address global warming, carbon emissions from energy and industry have increased by 60 per cent since the United Nations Framework Convention on Climate Change was signed in 1992.

"To reach net zero emissions by 2050, annual clean energy investment worldwide will need around US$4 trillion (RM18.7 trillion) by 2030, and Malaysia alone needs RM1.3 trillion by 2050,” he said.

Awang Adek said that considering clean energy’s huge financing requirement, the financial sector must continue to facilitate financing and investments in these key areas to support the government’s priorities.

"Credit rating agencies also play a vital role in advancing environmental, social, and governance (ESG) disclosure and reporting, aligning with the national sustainability agenda.

"As for entities responsible for issuing securities, prioritising sustainability will send a strong signal to encourage greater adoption within the industry,” he said.

He said that to facilitate the adoption of standards issued by the International Sustainability Standards Board (ISSB) in Malaysia, the government had established an inter-agency Advisory Committee on Sustainability Reporting (ACSR), chaired by the SC, to steer the implementation and adoption of the ISSB Standards by Malaysian companies in an orderly manner.

Awang Adek said the SRI-linked Sukuk Framework, which is aligned with international standards and best practices, was released in 2022.

He said the SC has also incorporated the Asean Sustainability Linked Bond Standards into its regulatory framework, and these give the Malaysian capital market a complete suite of bond and sukuk standards to help companies raise financing for transition purposes.

"The SC’s sustainability agenda also extends beyond bonds and sukuk, covering other market segments, and this includes fund management, SRI taxonomy, as well as providing frameworks for sustainability-related disclosures.

"Malaysian SRI funds regulated by the SC follow specific guidelines for transparency and adherence to sustainable investment principles. These funds play a crucial role in promoting sustainability and responsible investing in the Malaysian financial market,” he said.

Awang Adek said that since the inception of the SRI Funds guidelines in 2017, 39 unit trust funds and 28 wholesale funds have been registered with the SC.

The SC chairman said the Malaysian Bond and Sukuk market stood at the crossroads of opportunity and responsibility, and by championing sustainability, it not only paved the way for a more resilient and inclusive economy but also left behind a legacy of stewardship for generations.

"Let us move towards a future where finance serves as a force for good, and prosperity is measured not just in monetary terms but in the well-being of our planet and the people who live on it,” he added. — Bernama