KUALA LUMPUR: As the global movement towards sustainability or environmental, social and governance (ESG) is gaining momentum, the role of financial institutions (FIs) is significant in the transition towards green investments.

       Bursa Malaysia chairman Tan Sri Abdul Wahid Omar said FIs are at the heart of sustainability, to a greater extent than carbon dependent industries because the financial system is seen as a catalyst for change across the whole economy.

       “In view of providing financing solutions through their core expertise, from lending to catalysing capital markets, FIs can tap into an immense and increasingly critical opportunity to create a positive impact,” he told Bernama.

       He said investors and FIs are increasingly recognising the value proposition of incorporating ESG as considerations in asset allocation and financing.

       “Some institutions are allocating capital and steering financial flows towards more low carbon, climate-resilient activities while others are taking steps to change corporate behaviour, influence policy outcomes and build the data, tools and transparency required to embed climate change into how the market functions,” he added.

       Abdul Wahid noted that there is also increasing commercial and competitive pressure on FIs to favour green and sustainable investment, and in doing so, adopt higher standards of transparency.

       “What is notable is that many FIs were already moving down the path towards green financing before the Covid-19 pandemic,” he said. — Bernama