CLIMATE change is a global challenge. The increased frequency of extreme weather events – from the recent floods in Europe and China, and forest fires in the United States and Australia – serve as a sober reminder on two fronts.

       First, no country is spared. Secondly, this is not a problem for a distant future generation, but for our generation now. Addressing climate change requires urgent cooperation at a global level, including coordinated actions, collaborative policy platforms and common standards.

       From my observation as well as that of my colleagues in the various international fora that the Securities Commission (SC) participates in, I am increasingly hopeful with efforts currently undertaken globally to address these challenges. The momentum of global efforts has accelerated in recent years. Indeed, 2021 is poised to be an inflection point for future climate actions.

       A global race against time

       Notably, three months from now, the United Nation’s (UN) Climate Change Conference (COP26) will bring global communities together to accelerate action towards reaching the Paris Agreement and UN Framework Convention on Climate Change goals.

       One of COP26’s main goals is to collectively mobilise finance in both the private and public sectors to achieve at least US$100bil (RM422bil) a year in order to secure global net zero carbon emissions.

       This is crucial. As highlighted in my previous columns, finance is key to a sustainable future, given the role it plays in mobilising capital that is needed to finance sustainable projects.

       Efforts to finance the transition towards a greener economy are however often fraught with challenges, such as fragmented policies and standards.

       With the multiplicity of sustainable frameworks and lack of common definitions of sustainable activities that issuers and asset managers prescribe to, investors have difficulty assessing sustainability-related risks and opportunities that are critical for their investment decisions and risk management.

       Recognising this, a key initiative in the lead up to COP26 is the development of a common set of global sustainability standards. Led by the International Financial Reporting Standards (IFRS), this common standards will help meet investors’ needs for globally consistent and comparable information.

       It is also working to set up a new board, the International Sustainability Standards Board (ISSB) to sit alongside the International Accounting Standards Board (IASB) to set these IFRS sustainability standards.

       Acting meaningfully

       Through the International Organisation of Securities Commissions (IOSCO), the leading global standard setter for securities regulation, of which the SC is an active member, we support the call for the ISSB to move quickly to meet the needs of investors regarding other ESG matters.

       Investors currently are not receiving the information they need from sustainability disclosures. Paraphrasing a famous quote – if we can’t measure what matters, we can’t act meaningfully. Having a common global baseline for these standards that would allow countries to combine with their own local requirements is thus very much welcomed.

       Domestically, we need to be cognisant of the speed with which developments are taking place internationally, and to ensure the readiness of our economy and the financial system to respond to these developments.

       Increasingly, Malaysian corporates must invest to have sufficient expertise and capabilities to be able to report sustainability information meaningfully – with the same depth and rigour as financial reporting.

       This includes having high quality and crucial ESG-related data, as well as other non-financial information to bridge the data gaps and support risk management.

       Committed to sustainability

       Over the longer term, it is my hope that this will be a wake-up call for Corporate Malaysia to pivot meaningfully towards serving the interests of a broader set of stakeholders – including our communities and our environment.

       The SC is firmly committed to sustainability, and will facilitate this transition of our corporates.

       As outlined in our five-year Sustainable and Responsible Investment (SRI) Roadmap for the Malaysian Capital Market, strengthening sustainability disclosures of our public listed companies, and promoting the adoption of sustainable business practices including disclosure for our smaller businesses are two of our key recommendations.

       We are also working collaboratively within the broader public policy ecosystem of Malaysia to accelerate this shift for the financial sector. This includes the Joint Committee on Climate Change (JC3) which is led by both the SC and Bank Negara, with key financial industry players and experts as members.

       Some of the key priorities of the JC3 include supporting the implementation of climate-related disclosures and develop practical resources to help firms that interact with financial institutions, improve their disclosures.

       Time to act is now

       Since last year, we have been facing the profound impact of another risk event on corporate health. However, Covid-19 also showed that the world has the collective ability to tackle an existential threat, with vaccines produced in months. This same determination must be brought to bear for climate change.

       It is said that fortune favours the brave. I would add that it also favours the well-prepared. We cannot afford to delay the shift towards a greener economy.

       Corporate Malaysia must act now to provide momentum for a better and more sustainable future for all.

       Datuk Syed Zaid Albar is the executive chairman of the Securities Commission. The views expressed here are the writer’s own.