Navigating Malaysia’s Green Taxonomy: A Pathway to Sustainable Development
Evidence shows that Malaysia’s climate is facing a significant crisis, having seen surface mean temperatures increase ranging from 0.13°C to 0.24°C per decade between 1969 and 2016 (Ministry of Environment and Water, December 2020). With this in mind, it isn’t difficult to see why adopting green taxonomy is so crucial when it comes to integrating sustainability into the country’s sustainability and economic frameworks.
What Is The Green Taxonomy?
The Green Taxonomy classification system is based on eco-friendly economic or business activities that are supportive of efforts to protect the environment and mitigate further climate change. Green taxonomy frameworks like the CCPT (Climate Change and Principle-based Taxonomy) make it easier for actors within the financial services industry to classify the environmentally-friendliness of activities when developing a financial service product portfolio. Thanks to the green taxonomy, it’s far easier to work out which investments are considered to be “green”.
A Global Standard Adapted For A Country’s Specific Specialties
When it comes to developing taxonomies that are specific to individual countries, the taxonomy of the EU is frequently used as the key reference point, allowing it to be adapted and modified to suit the best industries of the nation as well as its own unique environmental priorities.
Malaysia’s also developing SRI (Sustainable and Responsible Investment) taxonomy is likely to focus on the areas that align with the country’s policies, most likely focusing on sustainable agriculture, renewable energies and production of palm oil.
Green Taxonomy in Malaysia
The adoption of green taxonomies by Malaysia couldn’t be more important in terms of being able to attract sustainable investments, mitigate future climate risks and, most importantly, drive the transition of the nation towards becoming a low-carbon economy. Supported by both the World Bank and the Central Bank of Malaysia, the country’s green taxonomy has an impact extending to numerous sectors.
The MIDA (Malaysian Investment Development Authority) has a vital part to play in supporting green technology investments via policies and incentives, and these initiatives are aiding manufacturing companies to adopt more sustainable practices. There are, however, some challenges that still remain for organisations, and especially SMEs, including the need to align with regulations, build capacity and obtain financial support. Nevertheless, green taxonomy can offer a significant opportunity to drive Malaysian economic growth through the attraction of sustainable investments.
Benefits of Green Taxonomy for Malaysia’s Future
There are many benefits that come with the implementation of Malaysia’s green taxonomy, not least that it becomes possible to attract more international investment while contributing to key environmental objectives.
Some of the advantages green taxonomy can offer to Malaysia to ensure its future is positive include:
- The establishment of a common stakeholder language for more effective communication.
- The alignment of investments with commitments to global climate goals.
- The provision of consistency and clarity in regulatory and financial practices.
- An enhanced understanding of the various environmental risks.
- Support of a diverse range of green investments.
- The contextualisation of low-carbon transition and climate resilience data.
- The reduction of reputational risk and encouragement of sustainable business practices.
Green Taxonomy – Ensuring A Positive Environmental Future
As Malaysia continues to develop its green taxonomy, businesses operating in the country should take a closer look at their ESG (environmental, social and governance) strategies. Elite Asia can offer a comprehensive ESG solution that makes the process of ESG strategy development, reporting, and marketing more efficient, simple, and effective.
