Late last week, Bursa Malaysia (BM), the Malaysian stock exchange, signed a memorandum of understanding (MoU) with the Alliance Bank Malaysia and OCBC Bank to establish #financing4ESG, an initiative aimed at improving the environment, social and governance (ESG) adoption practices of Malaysian publicly listed companies (PLCs).
The move also aims to enhance their ESG ratings with an eye towards possible inclusion in the FTSE4Good Bursa Malaysia Index, the Malaysian capital market’s leading ESG Index.
Under the MoU terms, BM will collaborate with Alliance Bank and OCBC Bank, and the three will develop sustainable financing options for the PLCs, in accordance with the FTSE4Good assessment criteria. Qualified PLCs can also benefit from the branding and capacity-building exercises to be led by the bourse and the two banks.
In addition, BM will also provide PLCs with access to its investor relations engagement and event platforms, and the opportunity to participate in specialised technical workshops on climate-related disclosures.
Muhamad Umar Swift, BM’s chief executive officer, says he hopes the collaboration “will spur the growth of sustainable finance while also enhancing the appeal of PLCs to investors”.
PLCs eligible for the sustainability financing, according to the MoU, are those in the FTSE Bursa Malaysia EMAS Index, which forms the FTSE4Good ESG assessment universe, made up of large cap PLCs, government-linked companies, and conglomerates, as well as small, medium-sized and Shariah-compliant enterprises.
“It is important to help business owners adopt ESG practices and innovations to reduce their carbon footprints. When businesses make sustainable choices, they can be a force for good for the community and environment,” says Joel Kornreich, group CEO of Alliance Bank, adding that sustainable choices can lead to the profitability of businesses in the long term.
As part of the understanding, Tan Ai Chin, managing director and head of investment banking at OCBC Bank, said the bank pledged to work collaboratively with BM, using the company’s experience in pioneering various sustainable finance transactions and capitalizing on Bursa Malaysia’s ESG database to provide optimal financing solutions for PLCs.
“We aim to mainstream the adoption of sustainable finance to further accelerate PLC sustainability agendas as a means to support the Malaysian government’s commitment towards achieving carbon neutrality by 2050,” she adds.
The #financing4ESG initiative was launched soon after the Association of Southeast Asian Nations (Asean) countries launched the Asean Taxonomy for Sustainable Finance (Version 1) in an effort to help them reach their ESG financing goals and Paris agreement commitments in a systematic manner using a common language.
Malaysia has been one of the Asean member-states at the forefront of ESG advancements, with the country’s Employee Provident Fund earlier announcing that it will set a sector-specific ESG framework by end-2021. Singapore, Malaysia’s neighbour, has also moved to push listed companies to be more ESG compliant, with the Singapore Exchange requiring listed companies to report on certain ESG matters. The Hong Kong Stock Exchange likewise has similar rules.
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