FOCUS ON SUSTAINABILITY
THERE is a need for more issuances of green sukuk in Malaysia to cater to increasing demand for such financing, says Retirement Fund Inc (KWAP) chief executive officer Datuk Wan Kamaruzaman Wan Ahmad. This is on back of higher awareness of responsible inv
RETIREMENT Fund Inc (KWAP) hopes that there will be more green sukuk issuances as demand has outstripped supply. KWAP chief executive officer Datuk Wan Kamaruzaman Wan Ahmad told NST Business the need to go green was higher than ever now, and the market needed to move faster to meet the demand.
At the World Capital Markets Symposium, here, last week, KWAP became the first pension fund in Malaysia to be a signatory of the United Nations supported Principles for Responsible Investment (PRI).
As a signatory, KWAP will support and promote the use of environmental, social and governance (ESG) investing programmes. “KWAP holds the principle that integrating ESG practices can generate sustainable risk-adjusted returns and enable it to perform its operations in a responsible manner.
“In the past, we have bid for our part of the green sukuk but we did not get the full allocation as the issuance size was small and could not accommodate all interested parties,” he said. Wan Kamaruzaman said Malaysia should be able to propel the green sukuk market further, given its position as the global hub of Islamic finance and having the backing of the Securities Commission (SC).
The commission had launched the Sustainable Investment Sukuk (SRI) framework in 2014. In July 2011, Malaysia, through Tadau Energy, issued the world’s first green sukuk — a RM250 million SRI sukuk to finance the construction of a large-scale solar project in Kudat, Sabah.
In October last year, Quantum Solar announced the world’s largest green SRI sukuk issuance of RM1 billion to fund three largescale solar photovoltaic plants in Gurun (Kedah), Jasin (Melaka) and Merchang (Terengganu).
Permodalan Nasional Bhd in November last year announced plans to raise a 15-year tenure secured green sukuk, the Merdeka Asean Green SRI Sukuk programme, via an unrated sukuk programme of up to RM2 billion.
As of now, some 60 per cent of KWAP’s total assets under management of RM125 billion are ESG-compatible.
Wan Kamaruzaman is confident that this would jump to 70 per cent on the back of its partnership with PRI.
“We believe we will hit 70 per cent eventually, but by being a signatory to the PRI, this objective can be achieved faster.”
Also present was PRI managing director Fiona Reynolds.
She said she was confident that KWAP would help push other local entities to be ESG-compatible.
“Malaysia is increasingly moving towards green and sustainable capitalism. In recent years, the SC and Bursa Malaysia have sent very strong signals towards this end.
“Now that KWAP has become one of our signatories, we believe that other local corporates will follow suit, given the fund’s standing in the local corporate landscape,” said Reynolds.
The PRI is the world’s leading proponent of responsible investment as it works to understand the investment implications of ESG factors and support its international network of investor signatories in incorporating these factors into their investment and ownership decisions.
The PRI acts in the long-term interests of its signatories, the financial markets and economies in which they operate and ultimately, the environment and society.