Asia-Pacific

Malaysia Forms Group to Support Climate Taxonomy Adoption

Joint Committee on Climate Change committed to early adoption of the taxonomy, ahead of the July 2022 deadline. 

Malaysia’s Joint Committee on Climate Change (JC3) is establishing a new implementation group to support financial institutions in their adoption of the country’s Climate Change and Principle-Based Taxonomy (CCPT).

The JC3 was set up in September 2019 and is co-chaired by Malaysia’s securities commission and central bank, comprising Bursa Malaysia and 19 other industry participants.

The CCPT was finalised and issued by BNM in April, providing a common framework for the classification of climate risk-related exposures of financial institutions to support risk assessments and encourage financial flows towards greening the economy.

Following its 5th meeting held on Monday (2 August), the JC3 said the new CCPT Implementation Group will help financial institutions implement new requirements to classify and report their lending and investment activities in line with the CCPT from July 2022.

Twelve JC3 members have committed to early adoption of the CCPT, ahead of the July 2022 deadline.

Work is also underway to develop reference guides on climate risk management, scenario analysis, and climate-related disclosures. The JC3 expects to publish the reference guides in Q4 this year.

The JC3 will also produce relevant localised reference climate scenarios for Malaysia to improve the understanding of the physical and transition impact of climate change under different climate pathways.

“This in turn will support risk assessments, better alignment of business strategies with climate targets, and climate-related disclosures by financial institutions,” the JC3 said.

The JC3 will also release details on plans for mandatory climate-related financial disclosures by financial institutions by year-end.

At the latest meeting, JC3 members have also endorsed the workplan of a newly established sub-committee on Bridging Data Gaps, which plans to create a catalogue of climate data that can be accessed by the financial sector.

The workplan prioritises data to support investment and lending decisions, macroeconomic modelling, stress testing, scenario analysis and product development.

The JC3 has published a report summarising the key insights, discussions and calls to action from the virtual JC3 Flagship Conference “Finance for Change”, which was held in June 2021.

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