KUALA LUMPUR: Bank Negara will continue to enhance its regulatory decisions, which include enforcing mandatory disclosures and stress testing in the quest to tackle the risk of climate change to the economy.

       Governor Tan Sri Nor Shamsiah Mohd Yunus said the central bank would review its prudential standards, where appropriate, and find solutions to address some challenges in Malaysia as an emerging economy.

       “As an example, the spillover risks caused by the war in Ukraine and an ongoing decoupling of the Russian economy from the global economy would lead to upside risks to inflation, higher commodity prices and disruptions in supply chain.

       “Such fears have led to fears that climate actions could be set back and at the same time, the war has brought forward the reality of a disorderly transition,” she said at the IMF Policy Dialogue: Climate-Related Financial Risks and Green Finance in Asia and the Pacific held virtually, Bernama reported.

       Nor Shamsiah said the central bank is focusing on building a solid foundation and ecosystem for climate risk transition where it would create awareness and build expertise within the financial sector around climate change.

       She also called for financial institutions, investors and businesses to become part of the solutions and embrace climate-aligned actions.

       “We developed and rolled a principled-based taxonomy as a common classification system for economic activities that are climate compatible to guide investments, financing and underwriting decisions,” she added.

       The Joint Committee on Climate Change (JC3) was established in 2019 and chaired by Bank Negara and the Securities Commission to strengthen response to climate change.