It provides universal guiding principles for the classification of economic activities that qualify for sustainable investment

THE Securities Commission (SC) today unveiled the Principles-Based Sustainable and Responsible Investment Taxonomy for the Malaysian Capital Market (SRI Taxonomy) to help advance the nation’s climate and sustainability agenda.

According to Awang Adek, the SRI Taxonomy adopts a principles-based approach to enhance the standardisation and comparability of sustainable investment assets (TMRpic)

The SC said the SRI Taxonomy provides universal guiding principles for the classification of economic activities that qualify for sustainable investment.

It aims to give clarity towards enabling proper and consistent identification and classification of various types of economic activities as well as the definition of sustainable investments.

The SRI Taxonomy also seeks to address concerns on the need to mitigate and manage the risks of greenwashing.

SC chairman Datuk Seri Dr Awang Adek Hussin said the SRI Taxonomy adopts a principles-based approach to enhance the standardisation and comparability of sustainable investment assets.

“This was done after considering the state of readiness of the wider Malaysian capital market, as the capital market constituents are at different maturity levels in their sustainability journey,” he said in a statement today.

The SC said given Malaysia’s strong position in Islamic finance and the alignment of the underlying principles of Islamic finance with sustainability, particularly from the social and ethical investing perspectives, the SRI Taxonomy also includes a social component, in addition to the environmental component.

The development of the SRI Taxonomy was undertaken by the SC, in collaboration with the industry through an Industry Working Group (IWG).

The IWG comprises the World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia as the Lead Technical Expert, and representatives from Bursa Malaysia, asset and fund management companies, investment banks, asset owners and other sustainable finance specialists. — TMR