KUALA LUMPUR – The Securities Commission's (SC) sustainable and responsible investment taxonomy (SRI Taxonomy) released in December last year offers a significant opportunity to ensure the standardisation and compatibility of SRI assets.
It also presents a significant opportunity in preventing market fragmentation and reduces the risk of greenwashing, said SC chairman Datuk Seri Awang Adek Hussin in his opening remarks at the SC-Securities Industry Development Corporation (SIDC) SRI Taxonomy: Insights and Implementation Conference today.
He said SRI Taxonomy allows for proper and consistent identification and classification of various types of economic activities aligned with environmental, social, and sustainability objectives.
“This will provide the necessary transparency for capital market participants on what constitutes being sustainable.
“Also, as it is domestically driven, we ensured that it suits local requirements – be it for our corporate issuers or investors,” he said.
Awang Adek noted that Malaysia was one of the earliest countries in the region to release specific guidelines on SRIs to facilitate sustainable financing and investments, as well as encourage this segment's growth.
Since the SC’s “Guidelines on SRI Funds” was introduced in 2017, the number of SRI funds in the market has grown to more than 50, with a total size of RM7 billion.
In his speech, Awang Adek also highlighted that the environmental component of the SRI Taxonomy is aligned with the Foundation Framework of the Asean Taxonomy for Sustainable Finance Version 1 and Bank Negara Malaysia's Climate Change and Principle-Based Taxonomy.
“We have also included a social component in the SRI Taxonomy, which will enhance the synergies between the Islamic capital market and SRI, as well as further strengthen Malaysia’s Islamic finance leadership.
“All these additional components can boost our market’s appeal, and attract more investors, particularly those that place a premium on sustainable practices,” he said, adding that it also ensures that capital is directed appropriately towards projects and companies that have real environmental and societal benefits. – Bernama, March 10, 2023
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