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Green Finance / Regulations / Treasury & Capital Markets
Malaysia expands SRI sukuk grant scheme
Expansion aims to facilitate transition finance for firms in carbon-intensive industries
The Asset 23 Aug 2022

The Securities Commission Malaysia (SC) has expanded the Sustainable and Responsible Investment (SRI) Sukuk and Bond Grant Scheme to support companies raising capital to meet their sustainable finance needs. The grant is now extended to sukuk issued under the regulator’s SRI-linked Sukuk Framework.

The expansion of the grant will enable eligible SRI-linked sukuk issuers to apply to offset up to 90% of the external review costs incurred, subject to a maximum of 300,000 ringgit (US$66,842) per issuance, the SC says in a statement.

The expansion is part of the Capital Market Masterplan 3’s priority to facilitate transition finance which supports Malaysia’s commitments and aspirations to transition to a low-carbon and climate-resilient economy. It aims to encourage the issuances of SRI-linked sukuk by corporates in carbon-intensive industries as they transition to better sustainability practices and low-carbon activities.

Established in 2018, the grant, formerly known as the Green SRI Sukuk Grant Scheme, is also applicable to sukuk issued under the commission’s SRI Sukuk Framework and bonds issued under the Asean Green, Social and Sustainability Bond Standards.

In respect of the framework, the key distinguishing feature is the requirement to have external reviews, at pre- and post-issuances, as the SC believes these will be crucial in providing independent opinion and verification on the issuer’s sustainable objectives as well as alignment to the framework.

Launched on June 30 2022, the framework aims to facilitate fund raising by companies in addressing sustainability concerns such as climate change or social agenda, with features that relate to the issuer’s sustainability performance commitments.

The framework is premised on financial and/or structural features, disclosure and reporting in accordance with international best practices, and further enable issuers to demonstrate sustainability priorities with clear, measurable targets that can be tracked by investors.

Under the framework, the proceeds raised can be used for general purpose, subject to the issuer committing to future improvements for sustainability outcomes within a predefined timeline, which will be monitored using key performance indicators.

As part of its efforts to promote SRI and transition finance, the SC and Capital Markets Malaysia, supported by the Joint Committee on Climate Change, on Tuesday (August 23) organized a workshop to equip capital market intermediaries with an understanding of the framework’s requirements and to share best practices in SRI-linked sukuk issuances.

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