109-32 Climate Change and Principle-based Taxonomy

Summary

This document aims to: (a) provide an overview of climate change and its impact on businesses and households as well as the broader economy; (b) introduce a principle-based taxonomy for FIs to assess and categorise economic activities according to the extent to which the activities meet climate objectives and promote the transition to a low-carbon economy. The taxonomy also incorporates the consideration of broader environmental outcomes through the principle of no significant harm, with specific regard to how business operations affect pollution, biodiversity and resource efficiency. In supporting an orderly transition, the taxonomy recognises remediation measures and introduces a progressive system of transition categories to acknowledge concrete efforts and commitments by businesses to adopt sustainable practices; and (c) facilitate standardised classification and reporting of climate-related exposures to support risk assessments at the institution and systemic levels, strengthen accountability and market transparency, and encourage financial flows towards supporting climate objectives. FIs can also leverage on the taxonomy in the design and structuring of green finance solutions and services to accelerate development of green sectors and activities, and decarbonisation efforts.

Thumbnail image for This document aims to: (a) provide an overview of climate change and its impact on businesses and households as well as the broader economy;
(b) introduce a principle-based taxonomy for FIs to assess and categorise economic activities according to the extent to which the activities meet climate objectives and promote the transition to a low-carbon economy. The taxonomy also incorporates the consideration of broader environmental outcomes through the principle of no significant harm, with specific regard to how business operations affect pollution, biodiversity and resource efficiency. In supporting an orderly transition, the taxonomy recognises remediation measures and introduces a progressive system of transition categories to acknowledge concrete efforts and commitments by businesses to adopt sustainable practices; and (c) facilitate standardised classification and reporting of climate-related exposures to support risk assessments at the institution and systemic levels, strengthen accountability and market transparency, and encourage financial flows towards supporting climate objectives. FIs can also leverage on the taxonomy in the design and structuring of green finance solutions and services to accelerate development of green sectors and activities, and decarbonisation efforts.

Issuer

Malaysia

Year

2021

Region

Asia

Issuer (type)

Bank Negara Malaysia (Central Bank)

Policy Type

Other sustainability policy

Geographical scope

National

Mandatory or voluntary

Voluntary

Main industries targeted

Agriculture, Forestry, Fishing & Hunting
Manufacturing
Mining, Quarrying, Oil & Gas Extraction
Finance & Insurance

Restrictiveness

Very High

Sustainable Development Goals (SDGs)

SDG 1: No Poverty
SDG 2: Zero Hunger
SDG 3: Good Health and Well-being
SDG 4: Quality Education
SDG 6: Clean Water and Sanitation
SDG 7: Affordable and Clean Energy
SDG 8: Decent Work and Economic Growth
SDG 9: Industry, Innovation, and Infrastructure
SDG 10: Reduced Inequality
SDG 11: Sustainable Cities and Communities
SDG 12: Responsible Consumption and Production
SDG 13: Climate Action
SDG 14: Life Below Water
SDG 15: Life on Land
SDG 17: Partnerships for the Goals