MoF has begun budget-tagging specific measures to ensure that various ministries spend accordingly
by ASILA JALIL / pic by BERNAMA
THE financial sector plays an important role in driving Malaysia’s sustainability journey especially after the country has experienced the unprecedented impact of Covid-19 for the last two years coupled with the recent floods that pushed more people into extreme poverty.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz (picture) said the Ministry of Finance (MoF) and its agencies have paved the way for sustainable development financing and is confident that the sector will contribute to the success of the nation’s sustainability journey.
To execute the plans, he said three key factors must be prioritised by the sector among which include ensuring that funds for sustainable development are available.
“Financial institutions, as the lifeblood of the economy, should embrace the sustainability agenda and deliver their commitments, whether through financing or through their operations and corporate social responsibility initiatives, such as prioritising vendors and partners who also commit to the sustainability agenda,” he said in his keynote address at the MARC 360: Sustainable Development Financing 2022 conference yesterday.
His speech was read by MoF sec gen Datuk Seri Asri Hamidon.
Tengku Zafrul said financial institutions must assist the government in mainstreaming the sustainability agenda across as many sectors and industries soon, as the nation races against time to mitigate the effects of climate change and other future shocks.
The ministry has already begun budget-tagging specific measures to ensure that various ministries spend in accordance with the country’s sustainability expectations.
“To maintain the momentum of this mainstreaming process, financial institutions must share key data on how each industry has ‘shaped up’ in terms of sustainability, so that future policies can be tweaked accordingly to improve our climate adaptation and crisis mitigation strategies as quickly as possible,” he said.
Financial institutions were also told to help the government in enabling and improving the adaptive capacity of households and businesses.
Apart from providing incentives, Tengku Zafrul said the institutions must also remove barriers, such as lack of information and financing, as well as behavioural biases and imperfect markets.
“We can support the right innovation and technologies to mitigate climate and other risks if we work together to make this information available.
“We want to ensure that financing is available for environmental or social solutions that may have high upfront costs by enabling start-ups through platforms like Penjana Kapital,” he said.
He added that the ministry and other regulatory bodies such as Bank Negara Malaysia and the Securities Commission of Malaysia have been developing a comprehensive framework for sustainability, with an aim to establish Malaysia as a sustainable financial hub.
Among the government’s efforts to prioritise sustainability, Tengku Zafrul said the government have pursued aspects such as the Sustainable Development Goal (SDG) Tagging of Development Expenditure, the establishment of the MySDG Trust Fund, the introduction of the Sustainability Sukuk, and Government Green Procurement through the Integrated National Financing Framework.
It also aligned the national budget measures with the SDGs to fund SDG-related projects.
“According to the United Nations (UN), Malaysia is one of the ten countries in the world that has fully aligned its national budget with the SDGs. This reflects the government’s unequivocal commitment to doing so right away.
“Our Prime Minister, YAB Dato Sri Ismail Sabri Yaakob, recently established the Malaysia Sustainable Development Goals Foundation (or MySDG Foundation), which will manage the MySDG Fund in collaboration with the UN. To advance Malaysia’s sustainable development agenda, the private sector and other parties can contribute to the fund,” he added.
Tengku Zafrul further elaborated that the government will be issuing a sustainability sukuk of up to RM10 billion later this year to fund projects that focus on socioeconomic and environmental sustainability.
“I must emphasise that sustainability is a shared responsibility. Globally, climate change and another global pandemic are the two most important issues that could shape, make or break this century.
“As a result, Malaysia must do everything possible to promote sustainable development, and the lowest hanging fruit is the financial sector, the lifeblood of our economy,” said Tengku Zafrul.