According to Bursa Malaysia Bhd chief executive officer Datuk Muhamad Umar Swift, companies with good environmental, social and corporate governance (ESG) practices have been more resilient since the start of the Covid-19 pandemic as investors’ growing concerns over damage to the environment have led them to put more value on the effective management of ESG risks. While sustainable finance is still emerging in ASEAN capital markets, governments and regulators are making some meaningful efforts to promote and support the endeavour. The Covid-19 pandemic is widely seen to have given sustainability further impetus. Millennials and Gen Z are showing greater concern with respect to sustainability and changing expectations of businesses’ role in improving society and protecting the environment. At the regional level, key developments include using the ASEAN Green Bond Standards, the ASEAN Social Bond Standards and the ASEAN Sustainability Standards to foster greater transparency and consistency across the region, whereby doing so reduces due diligence costs for investors. Preliminary work has also commenced for an ASEAN taxonomy of sustainable finance. For Bursa, sustainability has always been a significant growth driver, with its approach having considerable influence on the ecosystem — for public listed companies, investors and capital market intermediaries. With several recent listings of companies involved in the renewable energy space, Bursa sees a potential growth area, given increasing priority by consumers and investors on the sustainability front. These are some of the important steps that will help drive sustainability across the region. He is confident that the integration of sustainability best practices will see a successful transition to a genuinely sustainable economy for the ASEAN region.
SC plans to release guide on sustainable and responsible investment taxonomy by year end
According to The Securities Commission Malaysia (SC) chairman Datuk Syed Zaid Albar, SC plans to release a public consultation paper on sustainable and responsible investment (SRI) taxonomy by year end to provide more clarity and guidance in identifying sustainable investment assets or activities. SC is currently in discussion with key industry stakeholders on guiding principles for SRI taxonomy. It has identified SRI taxonomy for the capital market as a critical building block to facilitate greater product diversity and accelerate the development of SRI as an asset class. It is also working with market participants to assess the benefits of positive screening that incorporates shariah requirements with environmental, social and governance (ESG) standards. To date, 64% of SRI sukuk issuances are for renewable energy projects. He sees the need to expand this base by targeting transformative technologies and industries with high spill over benefits for the country. In supporting the sustainable agenda in the region, the SC is involved in two key initiatives through the ASEAN Capital Markets Forum, namely the ASEAN Taxonomy for Sustainable Finance and the ASEAN Sustainability-linked Bond Standards. The ASEAN Taxonomy for Sustainable Finance also involves Bank Negara Malaysia (BNM), and it seeks to identify economic activities that are sustainable and helps direct investments and funding towards a more sustainable region. Meanwhile, the ASEAN Sustainability-linked Bond Standards provides an avenue for issuers to raise funds to meet sustainability targets.
Eye On The Markets
This week, on Thursday (24Jun), the Ringgit was 4.1630 against the USD from 4.1495 on Monday (21Jun). Meanwhile, the Ringgit was 3.0960 to the Sing Dollar on Thursday (24Jun). On Monday (21Jun), the FBM KLCI opened at 1580.51. As at Friday 25Jun) 10:00am, the FBM KLCI is down 18.14 points for the week at 1562.37. Over in US, the overnight Dow Jones Industrial Average closed up 322.58 points (+0.95%) to 34,196.82 whilst the NASDAQ added 98.0 points (+0.69%) to 14,369.70.