Financial sector must increase green investments

SAHABAT Alam Malaysia (SAM) welcomes the efforts of Bank Negara Malaysia and the Securities Commission to accelerate climate action in the financial sector via the Joint Committee on Climate Change (JC3). We laud efforts to ensure financial institutions are adequately measuring, mitigating and building buffers against climate risks.

A recent JC3 statement affirmed the importance of managing climate change “given the significant risks and systemic impact that climate events can inflict on our lives and livelihoods”.

It is vital to push the financial sector towards scaling up environmental and low-carbon financing, and giving equal attention to investments in climate adaptation.

Adaptation deals with implementing measures to increase the nation’s resilience to climate impacts, such as implementing early warning systems for floods or other economic activities involving adaptations to climate change.

What is most startling from recent studies is the apparent lack of sufficient preparedness in many cities around the world, including our own, in addressing the possible climate impacts of climate change

More than two in three cities globally are already noticing the effects of climate change, from more heatwaves to worsening flooding, but few have effective plans to deal with the threats. Apparently, budget restrictions are a key reason.

Hence, investing in adaptation now is most vital. It is well known that financing for mitigation (i.e. reducing emissions) is usually prioritised over adaptation, as the former can be revenue-generating while the latter is not. But to ignore adaptation actions will lead to severe economic losses, as exemplified by forest fires and flooding.

In the case of investments in mitigation-related efforts, we stress the need to put an end to fossil fuel financing. It is troubling to know that Malaysian banks are at risk of having to prop up a dying industry, given huge investments in coal power, while the global landscape of renewable energy continues to expand rapidly.

While some Malaysian banks have stated they are taking a phased approach to easing up on coal financing, more urgency is needed in ending this altogether.

Our financing choices will determine whether we are on the path to a low-carbon and safe future that is also resilient to climate impacts or whether we are exposed to a whole load of risks similar to the Covid-19 pandemic that will have far-reaching consequences across all economic sectors as well as our lives.

Hence, we reiterate the urgency for the financial sector and banks to ensure climate-friendly investments.