Latest Updates
- Press release: Joint Statement on 13th JC3 Meeting (30 July 2024)
- Publication of SME Guidance Notes (SME GN) for SMEs to facilitate implementation of BNM Climate Change Principle-based Taxonomy Guiding Principle 3 and 4 (GP3 3 & GP4): SME Guidance Notes for SMEs (4 Jul. 2024)
- Joint publication with the World Bank: Managing flood risks: Leveraging finance for business resilience in Malaysia (20 Mar. 2024)
- JC3 SC1 Updates Documents for Implementation of CCPT Classification by Financial Institutions (12 Jan. 2024)
- New press release: JC3 Announces Initiatives to Support an Inclusive Transition to a Greener Economy (23 Oct. 2023)
- Press release: JC3 Statement on its 11th Meeting (27 Sep. 2023)
- JC3 SC1 via CCPT IG issues CCPT reporting template FAQs and Due Diligence Questions in assessing CCPT Guiding Principles 3 & 4 (17 Apr 2023)
- New key milestone: JC3 issues Climate Data Catalogue and accompanying Report (16 Dec 2022)
- Seven new JC3 observers: AIBIM, ADFIM, MIBA, MTA, FIMM, MMA, & Labuan FSA. See List of JC3 Observers (7 Dec 2022)
- New key milestone: Issuance of Policy Document on Climate Risk Management and Scenario Analysis (2 Dec 2022)
- Videos: Greening of SMEs (1 Dec 2022)
- Governor's Message at COP27 (9 Nov 2022)
- Key milestone: JC3 issues TCFD Application Guide for Malaysian Financial Institutions (29 June 2022)
- JC3 members: 2 new members (Kenanga Investors Bhd & UOB Asset Management Malaysia). See List of JC3 Members (29 June 2022)
Climate Change and Our Functions
In line with our mandates to preserve monetary and financial stability, we are preparing the Malaysian financial system to be more sustainable and climate-resilient.
As at November 2019, about 11.7% of the assets held by financial players in Malaysia are in sectors potentially exposed to climate change.
Malaysian financial institutions need to manage climate risk to ensure that their ability to provide financial intermediation services is not significantly affected by the threat of climate change. If not dealt with effectively, climate change could affect the general economy, leading to potentially large economic losses.
Impact of Climate-Related Risks to the Financial System
We aim to:
- Put in place appropriate regulation and supervision to ensure that financial institutions are adequately measuring, mitigating and buffered against climate risks.
- Increase the capacity of financial institutions to be the catalyst in the transition to a low-carbon economy. This includes increasing their offering of green financial solutions that can help their customers to transition to greener practices and to better cope with climate-related events.
"Bank Negara Malaysia will continue to provide a facilitative policy environment for the industry to advance financial innovations and explore novel financial structures needed to meet the significant financing needs for climate risk mitigation and adaptation."
Governor Abdul Rasheed Ghaffour
Keynote Address at the JC3 Journey to Zero Conference, October 2023
"The world is clearly moving more aggressively on building climate resilience in what is being described as the 'decisive decade for climate action'. Individual countries and firms cannot stand still. Not just because climate change has severe implications at a domestic level - more so for developing countries - but because global climate actions affect us directly through economic and financial linkages. How we respond is crucial."
Governor Nor Shamsiah
Keynote Address at the JC3 Flagship Conference, June 2021
"The effects of climate change are not merely an ecological problem for scientists and conservationists to worry about. It presents a major economic issue with direct implications on financial stability. It is for this reason that Bank Negara Malaysia, along with many other central banks around the globe, are giving serious attention to climate risk."
Governor Nor Shamsiah
Keynote Address at the Regional Conference on Climate Change,
September 2019
Our approach and strategy
Since 2019, we have taken a phased approach in responding to climate risk and put in place the building blocks for a strong foundation in climate risk management for the financial industry. Starting from 2021, we are integrating climate-related risk considerations in our regulatory and supervisory expectations, as well as macroeconomic and financial stability assessments.
Key thrusts of BNM's climate strategy:
Starting with ourselves
We ensure that our operations are consistent with sustainable practices. These include measures taken to adopt socially responsible investment strategies in our investment operations, sustainable currency operations, and reducing our carbon footprint in our day-to-day activities.
Engagement & capacity building
We work closely with the Government, experts, practitioners and opinion shapers to increase awareness and understanding on climate risks and their impact to financial stability. This is accompanied by initiatives to build capabilities within BNM and the financial sector to assess, manage and mitigate climate risks.
Integrating climate risk within macroeconomic & financial stability assessments
We will reflect climate risk developments and their impacts more prominently in its stress tests for the financial sector, ongoing surveillance of risks to financial stability, and macroeconomic forecasting models.
Strengthening regulatory & Supervisory expectations for managing climate risks
We expect financial institutions to effectively manage climate and environmental risks and reinforces these expectations through our supervisory activities. This includes improving disclosures in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
Creating an enabling environment for green financing & investment
We work with the financial industry, Securities Commission Malaysia and the Malaysian Government to align financial sector and national climate strategies, and address barriers to green financing and investments.
Expected Outcomes
A resilient and vibrant financial sector to support an orderly transition to a greener economy.
Our climate strategies both contribute to, and are informed by, Malaysia¡¯s national strategies to meet national commitments made under the Paris Agreement 2015. BNM's approach to climate risk is supported by six tracks of BNM's key functions.
These tracks aim to:
- Increase awareness and engagement both internally and with our key stakeholders, including the financial industry and Government agencies
- Deepen understanding and develop capacity to assess and manage climate risk and its transmission
- Lead by example and catalyse change by integrating sustainable practices within our investments, operations and culture
- Create an enabling environment for green financing and investment
Our Initiatives
We are involved in various initiatives in Malaysia as well as at the international level.
Central Banks and Supervisors Network for Greening the Financial System (NGFS)
Know more about climate change activities
Stay abreast by accessing speeches, webinars, videos and engagements.
Press Releases
Engagements
| Date | Event |
|---|---|
| 23¨C25 June 2021 | JC3 Flagship Conference #FinanceForChange
Assistant Governor Fraziali's panel session
|
| 4 June 2021 | Green Swan 2021: Coordinating Finance on Climate
Panel P: How can central banks, supervisors and regulators help to mobilise and coordinate with other actors (Treasuries, private sector) in the fight against climate change?
|
| Date | Event |
|---|---|
| 30 November 2020 | Climate Risk Asia Week 2020
Panel Discussion: The What and The How, with Governor Nor Shamsiah
|
| 20 October 2020 | Financing Climate Action Conference 2020 |
| 16 October 2020 | Climate Change: Where We Are |
| 14 October 2020 | Sustainable Finance Forum: Financing the SDGs in Southeast Asia
Presentation on 'Managing transition to low-carbon economy - Malaysia's financial sector response' by Assistant Governor Fraziali Ismail
|
| 06 October 2020 | Sustainable and Inclusive Finance Forum |
| 17 October 2020 | Malaysia Showcase during Climate Week NYC 2020 |
| 23 October 2020 | Central Banks, Climate Change and Stress Testing
Webinar with Deputy Governor Jessica Chew
|
| Date | Event |
|---|---|
| 3 December 2019 | IFN Green and Sustainable Finance Forum |
| 25 September 2019 | Regional Conference on Climate Change |
Speeches & Interviews
Key Milestones
Our milestones in integrating climate risk management within the industry locally and globally
| Month | Milestone |
|---|---|
| December 2022 | JC3 issues Climate Data Catalogue and accompanying Report |
| June 2022 | |
| March 2022 | |
| March 2022 |
"An Exploration of Nature-Related Financial Risks in Malaysia" - a World Bank-BNM Joint Report
|
| Month | Milestone |
|---|---|
| December 2021 |
Advancing the Financial Sector's Response to Climate Risk ¨C Sixth Meeting of JC3
|
| November 2021 | BNM's Support for the NGFS Glasgow Declaration |
| August 2021 |
Advancing the Financial Sector's Response to Climate Risk ¨C Fifth Meeting of JC3
|
| June 2021 |
JC3 Flagship Conference 2021 #FinanceForChange
|
| April 2021 |
Issuance of Climate Change and Principle-based Taxonomy (CCPT) Guidance Document
|
| February 2021 |
Towards Greening the Financial Sector ¨C Fourth meeting of JC3
|
| Month | Milestone |
|---|---|
| December 2020 |
Forming greater collaboration with Government - Roundtable Discussion with Ministry of Environment and Water
Enhancing transparency on Sustainable and Responsible Investment (SRI) disclosure ¨C Inclusion of input from BNM on its SRI management (BNM mentioned as one of the survey participants) in the NGFS Progress Report on the Implementation of Sustainable and Responsible Investment Practices in Central Banks¡¯ Portfolio Management
|
| November 2020 |
Strengthening thought leadership - Appointment of Bank Negara Malaysia as additional NGFS Steering Committee member
|
| October 2020 |
Increasing funding for climate initiatives - Submission of climate-related proposal for inclusion in National Budget 2021
Positioning climate agenda in national plans - Submission of climate-related comments for RMK12
Approval received for Report on the Roles of ASEAN Central Banks in Managing Climate and Environment-related Risks
|
| September 2020 |
Accelerating climate action ¨C Third meeting of JC3
|
| August 2020 |
Guiding industry on impact-based assessments for palm oil, renewable energy and energy efficiency sectors ¨C Issuance of the Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF) Sectoral Guides
|
| July 2020 |
Enhancing climate awareness and updates on BNM climate initiatives - Inclusion of climate change and green agenda in Board Presentation to Ministry of Finance
|
| June 2020 |
Roundtable Discussion with Mark Carney on 'The Role of Central Banks in Leading the Financial Sector Response to Climate Change Risks'
|
| May 2020 |
Strengthening global network - Participation of BNM in NGFS Plenary Meeting
|
| February 2020 |
Strengthening synergy with Government - Meeting with Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC)
|
| January 2020 |
Solidifying climate action plans ¨C Second meeting of JC3
|
| Month | Milestone |
|---|---|
| December 2019 |
Raising industry awareness on taxonomy - Issuance of Discussion Paper on CCPT
|
| September 2019 |
Raising industry awareness on climate change - Inaugural Regional Conference on Climate Change
Enhancing regulatory-industry collaboration on climate change ¨C First meeting of JC3
Enhancing visibility in NGFS supervisory work ¨C Stock take on FIs¡¯ risk differentials for default rates of ¡°green¡± and ¡°brown¡± assets & input to NGFS
|
| August 2019 |
Enhancing visibility in NGFS supervisory work ¨C Stock take on FIs' climate risk management practices & input for NGFS Supervisory Handbook
|
| July 2019 |
Enhancing visibility in NGFS macroprudential work - Box article on Malaysia¡¯s experience in Technical Supplement to the First NGFS Comprehensive Report
|
SME Green Videos
SMEs account for about 97% of all Malaysian businesses. The transition of SMEs to sustainable and greener practices is important for Malaysia to achieve net zero GHG emissions by 2050. It can also help SMEs to remain resilient and globally competitive. Now is the time for SMEs to make this change! Find out more on how initiatives such as recycling, use of solar energy, and green certifications can result in higher profitability over
Links to Related Organisations
Joint Committee on Climate Change (JC3) Members
Joint Committee on Climate Change (JC3) Observers
Multilateral Institutions & Organisations
Central Banks and Supervisors Network for Greening the Financial System
The World Bank
International Monetary Fund
The South East Asian Central Banks Research and Training Centre
Climate Bonds Initiative
Sustainable Finance Institute Asia
CDP Worldwide
World Wide Fund for Nature
Malaysian Sustainable Finance InitiativesAll organization names and logos are the property of their respective owners. Their use here is for identification purposes only and does not imply endorsement.
