BNM: An orderly and just transition to a greener financial system is crucial to avoid major economic and societal impacts
KUALA LUMPUR (30 March): Bank Negara Malaysia (BNM) said on Wednesday (30 March) that the central bank has dedicated 2021 to stepping up its response and taking collective action on climate risks within the financial sector in a move deemed crucial to build a climate-resilient financial sector that supports the greening of the economy.
In the BNM’s latest 2021 annual report released on Wednesday, the central bank said the effects of climate change will continue to be widespread and increasingly visible as they impact Malaysia’s economy and financial system. .
The BNM said “an orderly and just transition (to a greener financial system) is crucial for Malaysia to avoid major economic and societal impacts and take advantage of green growth opportunities.”
According to the BNM, a just transition means being “equitable and inclusive, giving due consideration and providing adequate support to affected segments”.
“There is a growing consensus that urgent actions are needed to decarbonize the global economy to mitigate the growing impact of climate change.
“To achieve this goal, many countries have committed to achieving net zero GHG emissions over the next three to four decades. For Malaysia, the government has committed to achieving this target by 2050,” said BNM.
BNM said the term GHG refers to greenhouse gases, such as carbon dioxide, methane and nitrous oxide.
“Specifically, we continued to play a formative role in building the capacity of our financial institutions. This included building capacity to measure, mitigate and protect against climate risks. Within the bank (BNM) , we continued to take steps to “green” our operations.
“At the macro level, we have focused on aligning the financial sector response to climate risks with national policies and strategies. climate issues on regional and international fronts, particularly with regard to climate equity,” BNM said.
BNM said nearly three years into the regulator’s climate risk management journey, the central bank has continued to strengthen its organizational approach to climate risk.
This led to the creation of the Sustainability Unit (SU), which is responsible for leading the BNM’s efforts to mainstream the green agenda into all central bank functions and operations.
“Reporting directly to the Governor and senior management of the bank (BNM), the SU coordinates and oversees the bank’s overall climate strategy and key initiatives. It provides technical and capacity building support to the six strands of key functions form the bank.
“The SU also interacts with the bank’s board of directors on climate-related strategies, leveraging their knowledge and experience. At the senior management level, a deputy governor serves as an executive sponsor to provide guidance and These developments support continued focus and effective execution of our climate strategies.
“Today, climate risks are regularly discussed in senior management and board deliberations. This reflects the growing consideration of climate-related risks in all aspects of our operations and functions,” said BNM.
Read more stories from the BNM Annual Report 2021 here.