KUALA LUMPUR (Bernama) -- The Joint Committee on Climate Change (JC3) aims to advance initiatives to strengthen the financial sector’s capacity in managing climate-related risks.

       During its fifth meeting yesterday, JC3 said following the issuance of the Climate Change and Principle-Based Taxonomy (CCPT) in April 2021, a CCPT Implementation Group will be established to support its consistent and credible implementation by financial institutions.

       Members of the JC3 consist of senior officials from Bursa Malaysia and 19 financial industry players, as well as relevant experts.

       Twelve JC3 members have committed to early adoption of the CCPT, in advance of expectations for financial institutions regulated by Bank Negara Malaysia (BNM) to classify and report their lending and investment activities in line with the CCPT from July 2022.

       "The CCPT provides a common framework for the classification of climate risk-related exposures of financial institutions to support risk assessments and encourage financial flows towards greening the economy,” BNM and the Securities Commission (SC) said in a joint statement today.

       JC3 members also reviewed the progress of work undertaken to develop reference guides on climate risk management and scenario analysis, as well as climate-related disclosures.

       The joint committee expects to publish the reference guides in the fourth quarter of this year.

       Concurrently, work will be undertaken by JC3 to produce relevant localised reference climate scenarios for Malaysia to improve the understanding of the physical and transition impact of climate change under different climate pathways.

       "This, in turn, will support risk assessments, better alignment of business strategies with climate targets, and climate-related disclosures by financial institutions,” said the statement.

       JC3 also said that its members further discussed plans for the mandatory climate-related financial disclosures by financial institutions and further details on these plans will be released by the end of the year.

       They also noted that a work plan for the newly established sub-committee on bridging data gaps was endorsed at the meeting.

       JC3 members supported the prioritisation of the initial use cases by the sub-committee, which include data to support investment and lending decisions, macroeconomic modelling, stress testing, scenario analysis and product development.

       For the use cases, the sub-committee will work with key public and private sector partners to identify critical data needs and map them to relevant data sources and create a catalogue of climate data that can be accessed by the financial sector, added the statement.