Going green to benefit Malaysia, citizens to reap opportunities from green transition: BNM
29 Mar 2023
Going green is important for Malaysia for two key reasons – to manage and mitigate risks associated with the inevitable impact of climate change as well as to enable Malaysia and its people to benefit from the opportunities offered by the green transition.
Bank Negara Malaysia (BNM) said achieving net zero for Malaysia will require upwards of RM350 billion in investments and both the government and the private sector, alongside the international community, have a critical role in achieving these goals.
In 2022, the central bank continued to make steady progress in its efforts to address climate-related risks, in line with its mandates to promote monetary and financial stability, as well as in its own operations.
“We continue to focus on strengthening the financial sector’s climate resilience.
“We made further progress in greening our own operations and advancing research to better understand how climate and nature interact with each other and with the financial system and economy,” said BNM in its Annual Report 2022 released today.
It said a large number of financial institutions now consider climate change in their operations, risk management, and business decisions. This affects how they form strategies, manage risks, carry out processes, and offer products and solutions.
“More financial institutions have also started actively engaging their customers on the topic of climate risks and transition plans,” the central bank said, adding that technical expertise in climate risk is still developing within BNM and it continue to invest resources to build the competence of its staff.
The central bank noted that transitioning to a climate-resilient economy entails high costs and risks and the government needs to help absorb some of the risks or reduce the overall cost, especially for the vulnerable segments such as small and medium enterprises.
“This could take the form of grants, guarantees, and tax benefits. Blended finance mechanisms where both public and private sector monies are used to fund highrisk transition and adaptation activities are also important.
“Innovative products need to be developed to distribute risk, encourage investments and better serve the needs of consumers,” it added.
For Malaysia, it is also important that these measures do not lead to financial exclusion and a further widening of income gaps. This ensures that those most vulnerable to climate change and often contributing least to it, are not disproportionately affected, said BNM.