Malaysia's central bank governor said that it would require financial institutions to report their exposure to climate risk, adding that information gathered could be used to set regulatory standards.
Bank Negara Malaysia (BNN) governor Nor Shamsiah Mohamad Yunus underlined environmental challenges in the world citing recent haze in Malaysia, Singapore and Indonesia caused by the burning of forests as a reminder.
«It presents a major economic issue with direct implications on financial stability,» she said recent regional climate change conference in Kuala Lumpur. «It is for this reason that BNN, along with many other central banks around the globe, are giving serious attention to climate risk.»
Defining Green Assets
The BNN governor said that new reporting requirements would be introduced after green asset classification are set by the Securities Commission Malaysia and the World Bank, which is expected to finalise by the end of the year.
«This framework aims to support informed decisions and analysis of exposures to climate risk in fundraising, lending and investment activities,» Nor Shamsiah said.
«Information gathered through this process will be used by the [central bank] to consider changes to prudential standards to better reflect risks from climate-related exposures.»
She added that the ecosystem of participants would include banks, insurers, venture capital and private equity firms.
