{"id":10072,"date":"2021-06-23T17:06:03","date_gmt":"2021-06-23T09:06:03","guid":{"rendered":"https:\/\/newmalaysiatimes.com\/?p=10072"},"modified":"2021-06-23T17:06:04","modified_gmt":"2021-06-23T09:06:04","slug":"fis-need-to-think-creatively-to-develop-new-innovative-solutions","status":"publish","type":"post","link":"https:\/\/newmalaysiatimes.com\/?p=10072","title":{"rendered":"FIs need to think creatively to develop new, innovative solutions"},"content":{"rendered":"\n

KUALA LUMPUR, June 23 — Financial institutions (FIs) need to think creatively to develop new and innovative solutions to fund sustainability projects; taking into account the current challenges faced by businesses and individuals, said Bank Negara Malaysia (BNM) Governor Datuk Nor Shamsiah Mohd Yunus.<\/p>\n\n\n\n

Speaking at the Joint Committee on Climate Change (JC3) flagship virtual conference on climate change, she said it would not be sufficient for FIs to use traditional instruments to meet the funding needs.<\/p>\n\n\n\n

\u201cFor example, blended finance is a viable option for businesses that struggle with the impact of climate change and the losses from the pandemic.<\/p>\n\n\n\n

\u201cIn combining concessional financing and commercial funding — such as combining philanthropic funds or social finance instruments and traditional lending — blended finance approaches can prevent excessive debt loads that could increase future risks,\u201d she said in her keynote speech at the JC3 Flagship Conference 2021, titled \u2018Finance for Change\u2019 today.<\/p>\n\n\n\n

Nor Shamsiah said the financial sector\u00a0can be more deliberate in\u00a0funding sustainability initiatives and incentivising investments in low carbon sectors.<\/p>\n\n\n\n

\"FIs\"<\/figure><\/div>\n\n\n\n

She noted that there are many such opportunities available, for example, projects under the National Investment Aspirations (NIA) framework; the Malaysian Climate Action Council (MyCAC)\u2019s plan for Malaysia to be a hub for green economy, services and technology; and the Low Carbon Mobility Development Plan 2021-2030.<\/p>\n\n\n\n

\u201cThere are also significant opportunities for financial institutions to support a green recovery from the pandemic through the provision of transition financing linked to sustainable practices.<\/p>\n\n\n\n

\u201cClimate change is not just a scientific issue. It is a business issue and it is a social one, inseparable from the basic obligations of FIs to prudently manage risks, act responsibly towards their customers and create long-term value,\u201d she added.<\/p>\n\n\n\n

Nor Shamsiah said the establishment of the JC3 in 2019 by BNM and the Securities Commission in partnership with the industry has served as a key focal point for collective climate actions in the financial sector and across multiple stakeholders. <\/p>\n\n\n\n

Consistent with the climate change issues, she said BNM will focus on regulatory and supervisory priorities in the near term to promote a climate-resilient financial system.<\/p>\n\n\n\n

\u201cBNM is exploring various options to encourage better risk management approaches by outlier institutions – including through Pillar 2 capital requirements and supervisory assessments,\u201d she said.<\/p>\n\n\n\n

Building on the implementation of the principles-based taxonomy and the work by JC3 to address data gaps, BNM\u2019s Financial Stability Committee has recently endorsed a four-year plan to prepare for industry-wide climate change stress tests at the counterparty level, she added.<\/p>\n\n\n\n

\u201cThis work is supported by efforts within the BNM to model the macroeconomic impact of climate shocks based on defined climate scenarios, and we will be taking further concrete steps to improve transparency on the management of — and exposures to — climate-related risks in the financial sector,\u201d said Nor Shamsiah.<\/p>\n\n\n\n

She added that to this end, BNM will finalise plans for mandatory climate-risk disclosures by FIs this year, in consultation with the financial industry.<\/p>\n\n\n\n

— BERNAMA<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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