SUSTAINABLE FINANCE POLICIES

Policies : Capital Market

The Securities Commission Malaysia (SC) and Capital Markets Malaysia (CMM) are aligned to support the advancement of Malaysia’s capital market intermediaries by capacity building and profiling via various policies, with sustainable finance as one of its four key areas. It outlines the Malaysian Government’s commitment to ESG and Sustainable Finance via these core policy and guidance documents:

Policy Summary Publication Date Objectives Key stakeholders
Capital Market Masterplan 3 (2021 to 2025) The new masterplan seeks to leverage the strengths and potential of the Malaysian capital market to accelerate economic growth that is sustainable and inclusive. September 2021
  • A capital market that is relevant to the development of the economy and its stakeholders.
Public sector, financial institutions, corporations, investors
Sustainable and Responsible Investment (SRI) Sukuk Framework The framework facilitates the creation of an ecosystem that promotes sustainable and responsible investing for SRI investors and issuers, aligned with the 17 UN SDGs. November 2019
  • Facilitate financing needs for projects that meet the UN SDGs.
  • Investor diversification.
  • Attract investors with SRI mandates to invest in Green, Social, Sustainable, and Waqf properties and assets.
Investors, issuers
Sustainable and Responsible Investment Linked (SRI-Linked) Sukuk Framework The Framework is an extension of the initiatives under the SRI Roadmap that was introduced in 2019 to broaden SRI products offerings. SRI-linked sukuk is a sukuk where the financial and/or structural characteristics vary depending on whether the issuer achieves its predefined sustainability objectives within a predefined timeline. June 2022
  • Attract a more diverse issuer and investor base.
  • Provide greater transparency for investors by requiring issuers to appoint an external reviewer before issuance.
Private sector, investors, issuers
Guidelines on Sustainable and Responsible Investment (SRI) Funds These Guidelines outline new and existing funds seeking to quality as an SRI Fund or ASEAN Sustainable and Responsible Fund. December 2017
  • Encourage the adoption of international best practices and keep abreast with global development to meet client expectations on sustainability.
Fund managers, issuers
Islamic Fund and Wealth Management Blueprint The blueprint seeks to establish Malaysia as a leading international centre for Islamic fund and wealth management. It also outlines capital market's involvement in SRI as the Shariah principles underlying Islamic investing have significant commonalities with the principles underlying SRI. January 2017
  • Strengthen Malaysia's positioning as a global hub for Islamic funds.
  • Establish Malaysia as a regional centre for Shariah-compliant sustainable and responsible investments.
  • Develop Malaysia as an international provider of Islamic wealth management services.
Fund managers, issuers
Waqf-featured Fund Framework The framework aims to facilitate the offering of Islamic funds with waqf features to enable the growth of the Islamic social finance segment. November 2020
  • Broadens the range of innovative Islamic capital market products and provide the public access to Islamic funds that allocate whole or part of the fund's returns towards socially impactful activities via waqf.
  • Integrates commercial with social objectives and enable investments for the greater good of society.
  • Sets out eligible waqf recipients and disclosure requirements to promote transparency of investors' investments and the waqf distribution.
Islamic fund managers, issuers
Corporate Governance Strategic Priorities (2021 to 2023) The priorities focus on supporting listed companies in responding to the rise of the stakeholder economy that calls for businesses to create value for a wider spectrum of stakeholders, including the society, and to have conscious consideration for their impact on the environment and vice versa. November 2021
  • Strengthening Board leadership for agile and responsible business.
  • Strengthening Environmental, Social and Governance fitness of Boards.
  • Support investor stewardship and engagement.
  • Leverage digital tools to enhance transparency.
  • Deepen engagement with youth on corporate governance.
Public Listed Companies
Guidance Note on Managing Environmental, Social and Governance Risks for Fund Management Companies The guidance note sets out requirements for fund management companies (FMC) to have a risk management framework that, among others, includes managing and monitoring risks assumed by the FMC on behalf of its clients and mitigation actions to address such risks. June 2022
  • Assist the FMC in establishing a responsible investment framework by providing clarity and setting out the SC's expectations on the development and implementation of practices, policies and procedures towards effective analysis and management of material ESG risks and risk-related considerations.
  • Facilitate meaningful disclosures to investors while driving positive impact and change.
Fund managers
Simplified ESG Disclosure Guide (SEDG) for SME in Supply Chains The Guide will provide practical guidance and the baseline disclosures expected of SMEs in relation to ESG aligned with international standards, to encourage greater transparency and improve the quality of SMEs' ESG disclosures. October 2023
  • Guide will further bring value to the overall process of enabling supply chain partners to meet their sustainability commitments.
  • Ensure alignment in the disclosure indicators with global disclosure frameworks.
Private sector, SMEs

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