Tengku Zafrul: More emphasis on sustainability in Budget 2023

KUALA LUMPUR: Budget 2023, due to be tabled on Oct 7, will place more emphasis on sustainability compared with the previous two budgets, says Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.

“Just as we fully integrate sustainability aspects in Budget 2021 and 2022, we will do the same and in fact, give a much higher priority to sustainability in the upcoming Budget 2023,” he said during the Accelerating Climate Action and Justice ministerial panel at the Cooler Earth Sustainability Summit 2022 here yesterday.

Tengku Zafrul said the government would issue up to Rm10bil in ringgit-denominated sustainability sukuk, starting in the fourth quarter of 2022 to fund eligible social or environment-friendly projects.

“We have enhanced the government’s green procurement policy, to encourage the use of green products and services.

“Moving forward, the Ministry of Finance (MOF) is finalising an integrated national financing framework, which is tailored to the country’s needs and requirements.

“In addition, we are also developing a more comprehensive, unified and explicit framework for sustainable finance through the sustainable finance roadmap,” he said.

Tengku Zafrul added that for Budget 2023, the MOF has issued six public consultation papers where three are related to sustainability as well as environmental and social governance (ESG).

“In terms of initiatives, we hope to work together with the private sector. Most importantly, we must ensure that our people who are most vulnerable to the transition (towards sustainable development goals) are protected through our ongoing and continuous effort in certain areas.

“These are, for example, facilitating employment opportunities in new and transitional industries, providing opportunities for reskilling, investing in alleviation of energy poverty, especially in rural areas and making clean, affordable and secure energy more accessible to all,” he said.

The government embraces the private sector and businesses as partners in ESG leadership, whether it’s adapting to climate change, addressing social inequalities or conserving the country’s natural environment, according to Tengku Zafrul.

“One of the ways we are doing this is through the mobilisation of savings and ensuring access to such investments.

“For example, at least 44 of the 54 SRI (sustainable and responsible investment) funds approved by the Securities Commission were launched over the last two years,” he said.

As at end-december 2021, 94% of Malaysia’s Top 50 listed companies had ESG strategies, with 68% having policies to reduce emissions.

“International investment communities have also focused on Esg-related risks and opportunities. Global ESG assets are on track to reach US$53 trillion (RM241.5 trillion) by 2025.

“As a result, in order for companies to remain competitive on a regional and global scale, ESG considerations are no longer a choice, but rather required as a means to access financing,” he said.

The fourth edition of the annual summit, organised by CIMB Group Holdings Bhd, themed Facilitating a just transition is held from Sept 20-24.

It was opened by the Sultan of Perak Sultan Nazrin Muizzuddin Shah with the objective of bringing industry experts, corporate leaders, businesses, non-governmental organisations, financiers and investors as well as policymakers to deliberate on the challenges and urgent action plans required to shape a sustainable future.

Meanwhile, CIMB Group is doubling its sustainable finance target to Rm60bil by 2024 under its Green, Social, Sustainable Impact Products and Services (GSSIPS) framework.

In a statement, the group said the increased commitment was made as CIMB had mobilised its earlier announced target of Rm30bil two years ahead of its plan, guided by its GSSIPS framework.

In his speech, CIMB group CEO Datuk Abdul Rahman Ahmad said as of 2020, the group’s financed emissions stood at 9,200 kilo tonnes of carbon dioxide (CO2) equivalent, covering 40% of its gross loan portfolio.

“We are committing to halve our thermal coal mining sector’s financing and investment exposure by 2030 to ensure we can deliver on our original promise to exit coal by 2040,” he said.

The CIMB Group is also committed to reduce the physical intensity in the cement sector by more than 35% from 0.72 tonnes of CO2 equivalent per tonne of cement produced in 2021, to 0.46 tonnes by 2030.

“Over the past year, we have successfully pioneered innovative market-leading transactions such as a sustainability-linked derivative and a sustainable collateralised commodity murabahah and most recently introduced our latest offering, the sustainable term investment account-i.

“We plan to introduce more innovative sustainable finance products and services moving forward,” he said.