20 Sept 2023
The Joint Committee on Climate Change (JC3) convened its eleventh meeting on 20 September 2023 to review the progress and action plans of JC3. Members also discussed the proposed deliverables and action plans of the newly established SME Focus Group within JC3
The Joint Committee on Climate Change (JC3) convened its eleventh meeting on 20 September 2023 to review the progress and action plans of JC3. Members also discussed the proposed deliverables and action plans of the newly established SME Focus Group within JC3.
Working Groups on Physical Risk and Transition Risk have been formed under JC3 to support financial institutions’ implementation of the Policy Document on Climate Risk Management and Scenario Analysis (CRMSA) issued by Bank Negara Malaysia. Engagements with industry are also being intensified to build capacity and accelerate preparations for the upcoming industry-wide Climate Risk Stress Test (CRST).
JC3 also noted improvements[1] towards more consistent and credible reporting by financial institutions under the Climate Change and Principle-based Taxonomy (CCPT), although financial institutions continue to face challenges in obtaining information from their customers and counterparties to enable appropriate classifications. In addressing this challenge, JC3 will facilitate the adoption of a standardised minimum due diligence questionnaire by financial institutions and develop tailored guidance for SMEs to provide the information required by financial institutions.
JC3 is reviewing the TCFD[2] Application Guide for Malaysian Financial Institutions[3] published in June 2022 and will make relevant updates to the Guide to take into account the International Sustainability Standards Board (ISSB) general sustainability-related (S1) and climate-related (S2) disclosure standards. Members were also updated on the immediate focus and priorities of the Advisory Committee on Sustainability Reporting. This committee was established with the endorsement of the Ministry of Finance and chaired by the Securities Commission Malaysia to look into the implementation of the ISSB in Malaysia.
The newly formed SME Focus Group under JC3 will initially focus on enhancing awareness, facilitating green certifications of SMEs and supporting better disclosures. This will complement existing initiatives by Government ministries and agencies to jump-start the transition journey for SMEs. The SME Focus Group will work in close collaboration with FIs, relevant Government ministries and agencies, Credit Guarantee Corporation and SME trade associations in this important effort.
Members also noted the positive outcomes from the Greening Value Chain (GVC) pilot programme, an initiative rolled out by JC3 earlier this year. The programme, implemented in partnership with four corporates, has enabled sixty participating SMEs within their supply chain to start measuring and reporting their greenhouse gas emissions.
Jessica Chew, Deputy Governor of Bank Negara Malaysia and Co-Chair of JC3, said, “It is critical to ensure that SMEs are not left behind in the transition to a greener economy. Key to this will be reducing the costs of transition for SMEs and leveraging strategic partners, including FIs and large anchor corporates to support SMEs on this journey.”
At this meeting, members also had a fruitful exchange with the Ministry of Economy to gain better insights on the National Energy Transition Roadmap (NETR) and the role of the financial sector in supporting the flagship projects outlined in the NETR, as well as areas of collaboration between the financial sector and Government.
Datuk Kamarudin Hashim, Managing Director of the Securities Commission Malaysia and Co-Chair of JC3, stated, “Given the nature of climate-related projects, public sector financing alone will not be viable. Blended financing can bridge the gap to make financing for sustainable projects more feasible. In this regard, blended financing can accelerate the implementation of projects and initiatives, including under the recently launched NETR by the Ministry of Economy, which aims to accelerate the development of a sustainable, affordable and resilient energy system to support Malaysia's low-carbon transition.”
JC3 will soon organise its biennial flagship conference that will take place from 23 to 25 October 2023 at Sasana Kijang, Kuala Lumpur. This hybrid JC3 Journey to Zero Conference will focus on practical and actionable solutions, emphasising the critical role of the financial industry in driving sustainable transformation. For those interested in participating in the JC3 Journey to Zero Conference, registration is now open at https://jc3conference.com/.
Bank Negara MalaysiaSecurities Commission Malaysia
27 September 2023
About the JC3
The JC3 is a platform established in September 2019 to pursue collaborative actions for building climate resilience within the Malaysian financial sector. The JC3 is co-chaired by Datuk Jessica Chew Cheng Lian, Deputy Governor Bank Negara Malaysia and Kamarudin Hashim, Managing Director Securities Commission Malaysia, with members comprising senior officials from Bursa Malaysia and 21 financial industry players. The JC3’s initiatives and priorities are undertaken by its five sub-committees, namely Risk Management; Governance and Disclosure; Product and Innovation; Engagement and Capacity Building; and Bridging Data Gaps.
Members: Allianz General Insurance Company (Malaysia) Berhad, AmBank (M) Berhad, Bank Islam Malaysia Berhad, Bank Pembangunan Malaysia Berhad, Bank Pertanian Malaysia Berhad (Agrobank), BIMB Investment Management Berhad, BNP Paribas Asset Management Sdn. Bhd., Bursa Malaysia Berhad, CIMB Bank, Etiqa Family Takaful Berhad, HSBC Amanah Malaysia Berhad, Kenanga Investors Berhad, Maybank Berhad, MIDF Amanah Investment Bank Berhad, MSIG Insurance (Malaysia) Berhad, RHB Islamic Bank Berhad, RHB Islamic International Asset Management Bhd., Standard Chartered Bank Malaysia Berhad, Swiss Re Asia Pte. Ltd. (Swiss Retakaful), Syarikat Takaful Malaysia Am Berhad, UOB Asset Management (Malaysia) Berhad and Zurich General Insurance Malaysia Berhad
[1] Improvements in interpreting guiding principles in particular Guiding Principle 3 (“no significant harm to the environment”) and Guiding Principle 4 (“remedial measures to transition”) after the issuance of the Due Diligence Questions in assessing BNM CCPT Guiding Principles 3 and 4 by CCPT IG in April 2023 [2] Task Force on Climate-related Financial Disclosures [3] Released by JC3 in 2022