The Joint Committee on Climate Change (JC3), the platform established in 2019 to pursue collaborative actions for building climate resilience within the Malaysian financial sector, will continue to work with the government, the financial industry and its partners on specific action plans to support a just and orderly transition of the economy.

The members endorsed the plans to continue focusing on increasing financial flows for climate transition and adaptation, and building resilience against climate-related risks, Malaysian regulators Bank Negara Malaysia (BNM) and Securities Commission Malaysia said in a statement on Thursday following its 12th meeting on to review the progress of ongoing work and discuss priorities and action plans of JC3 for the year.

In addition, efforts will be made to integrate a broader consideration of nature and environmental risks with the ongoing development of climate strategies by financial institutions.

Building on national policies that have been announced by the Government, JC3 will serve as a key platform to promote the financial sector’s alignment on sectoral transition pathways.

A key focus area in the coming year will be on supporting the financial industry’s development of credible transition plans.

This includes work to publish a JC3 Transition Finance Framework to guide the development of credible transition finance solutions.

“As more financial institutions have set climate targets, it is crucial for financial institutions to develop and execute concrete and credible transition plans that are aligned with these targets,” said Jessica Chew Cheng Lian, Deputy Governor of BNM and Co-Chair of JC3.

“At the macro level, transition plans should reflect and be consistent with national and sectoral pathways,

“This is important to ensure financial support for transition and adaptation activities and mitigate the effects of short-term dislocations to the economy,” she added.

While appreciating greater visibility on catalyst projects and funding needs under the National Energy Transition Roadmap (NETR) and New Industrial Masterplan (NIMP), the statement said members acknowledged the need to expand public-private partnerships and blended finance structures to mobilize capital.

Members discussed and agreed to work on potential strategies to achieve this, including sector-focused strategies and data priorities.

In supporting real sector transformation, members also noted the positive outcomes from the Greening Value Chain (GVC) pilot program rolled out a year ago.

It is noted the program has enabled more than 330 small and medium-sized enterprises (SMEs) to start measuring and reporting their greenhouse gas (GHG) emissions.

Following this encouraging development, JC3 will work with relevant authorities and partners to upscale the GVC among the government-linked companies (GLCs) and public listed companies.

It is also noted that the JC3 intends to document the approaches and learnings gained during the pilot phase to serve as a reference as part of this effort.

The meeting also reviewed progress on the planned implementation of a new pilot program focusing on Greening Industrial Parks (GIP).

This initiative aims to support the financing of green infrastructure and transition of pilot park managers and tenant companies.

Measurable outcomes include specific insights on financing structures and policy coordination to improve the viability of greening industrial parks that can be replicated to broader economic segments.

The JC3 will also continue to ensure meaningful support for SMEs to transition.

This includes access to finance, capacity building and practical tools to help with the transition.

The environmental, social, and corporate governance (ESG) Jumpstart Portal will also serve as a one-stop information portal on climate transition for SMEs.

JC3 will also collaborate with relevant government agencies and service providers to help SMEs secure sector-specific green certifications at reduced costs.

Standardised SME-focused due diligence templates and climate-related indicators are being developed to ease information requests made by financial institutions to SMEs, especially for loan and insurance applications.

According to the statement, sustainability disclosure standards remain another important pillar for JC3.

“With the release of the public consultation by the Advisory Committee on Sustainability Reporting (ACSR) on the proposed use of the International Sustainability Standards Board (ISSB) in Malaysia, the public is encouraged to share views on the approach, timing and other critical considerations and help shape the framework for Malaysia, as we look to ensure the reliability of the information disclosed,” said Kamarudin Hashim, Managing Director of the Securities Commission Malaysia and Co-Chair of JC3.

According to the statement, the members discussed updates on ongoing efforts to address data gaps.

They welcomed important progress made with the critical support of government agencies to improve the availability of key sectoral data relevant to priority use cases for the financial sector.

Data sources will continue to be populated on the Climate Data Catalogue published by JC3.

Other strategic areas discussed include the integration of nature and environmental considerations into business operations, product offerings and financial institutions’ decision-making processes.

Programs will be organized to build technical competency in this area.

The industry’s training needs will be supported by leveraging the Future Skills Framework that will be launched in the second quarter of 2024.

JC3 announces initiatives to support inclusive transition to greener economy in Malaysia