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Addressing Climate Risks through Financing:

The Impact of Climate Change & Principle-based
Taxonomy (CCPT) on Businesses

SBTi & Climate Symposium 2024

11 June 2024

SULIT
The information contained in these documents is restricted, privileged and only for the information of the intended recipient
and may not be used, published or redistributed without the prior written consent of Bank Negara Malaysia.

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BNM Approach : Multi-faceted partnership, including public-private partnership

Overview
...JC3 established as a regulator-financial industry collaborative platform to build sustainable finance ecosystem

...co-creation of sensible regulations and key responses

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Financial sector plays a crucial role in supporting an orderly green transition

Overview
• > 70% of total financing to the private sector in Malaysia is in the form of bank financing, and nearly half of bank financing to businesses
• Financial institutions play an important role in enabling their clients to transition through their lending, underwriting, and investment decisions

Financial Sector Blueprint 2022-2026 outlines

BNM’s approach in driving development Laying the foundations to enable the financial
sector to play its role in accelerating the
3 Broad Themes economy’s green transition
Finance for Finance for
Finance for all
transformation sustainability

Establish Work with Lead by example

guidelines & industry to by incorporating
regulations advance sustainability
clarifying products and
expectations innovation
5 Strategic Thrusts
Fund Malaysia’s Advance
1 2 Elevate the Financial
Economic 3 digitalisation of the
Well-being of Households Continue
Transformation Financial Sector
& Businesses
Conduct work to
engagements and bridge data
Advance Value Based Facilitate an Orderly and capacity building gaps
4 Finance through Islamic
5 Just Transition to a Greener
Finance Leadership Economy

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CCPT as a Key Building Block in Supporting an Orderly Transition

CCPT 101
Key
Considerations
1 Provides a framework that facilitates consistent assessment and classification of economic activities and their associated impacts on climate
and the broader environment

2 Principles-based assessment approach to support different stages of transitioning across economic sectors and segments
• Nascent understanding and appreciation of climate-related risks across economy and society
• Limited resources across FIs including technical capacity and experiences, data gaps

Climate change mitigation:

GP1 Avoid/reduce/enable others to avoid/reduce GHG Economic Activity Overall Business
Classification
Climate change adaptation: GP1 GP2 GP3 GP4
Increase own resilience/ enable others
GP2 Climate
No significant harm to the environment: C1 GP1 or GP2 or both ✓
Supporting
Prevent pollution, protect ecosystem & biodiversity,
sustainable use of resources & reduce GHG
5 Guiding emissions C2 GP1 or GP2 or both ✘ ✓
Climate
Principles GP3 Remedial efforts to promote transition: Transitioning
(GP) C3 ✘ ✘ ✓
Support transitions via implementation of action plans
towards sustainable practices
C4 GP1 or GP2 or both ✘ ✘
GP4Prohibited activities: Climate
Activities not illegal or contravene laws C5a ✘ ✘ ✘
Watchlist
C5b ✘ ✓
GP5

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DDQ Overview
Supplementary documents to support consistent CCPT implementation
Due Diligence Questionnaire (DDQ) - Foundational set of questions for mandatory adoption by FIs, in assessing compliance with GP3 and GP4
1
Guidance Notes (GN) - Detailed guidance to support DDQ adoption, includes relevant data sources in the Data Catalogue, assessment tools &
2
references
3
Frequently Asked Questions (FAQs) - Entails commonly asked questions on CCPT assessment

• Has there been any legal, compliance • Does the Client’s core activities involve
issues and/or complaints, negative significant consumption of:
coverage received from media/NGOs • Are the Client’s operations located in or • • Water

Resources
etc. associated with the Client’s near environmentally sensitive areas • • Natural resources (e.g. fossil fuel,
General

(“ESAs”) or key biodiversity areas minerals, timber, etc.)?

Ecosystem & Biodiversity

environmental performance in the last 3
yrs? (“KBAs”)?
• Are there any remedial measures
• Are there any remedial measures which • Does the Client’s operations create which have commenced or are
have commenced or are on-going to negative impacts on biodiversity and on-going to monitor, reduce and
address the identified issues or surrounding ecosystem? improve efficiencies in resource
complaints above? consumption?
• Are there any remedial measures which
have commenced or are on-going on the
• Does the business activity result in the protection and conservation of biodiversity • Do the Client’s core activities lead to

GHG Emissions
generation of waste and pollution that and surrounding ecosystem which are significant greenhouse gas (“GHG”)
cannot be recovered, reused, disposed impacted by the Client’s operations? emissions?
Pollution

of in an environmentally sound manner?

• Are there any remedial measures which
• Does the company have an have commenced or are on-going to
environmentally sound waste and reduce GHG emissions and/or in relation
effluent management for all the waste Identification Management to decarbonisation efforts?
that was produced?

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Access of the supplementary documents via JC3 website…

Supp.
Climate Data Catalogue

The data catalogue contains critical data

needed by the financial sector to support
pre-identified use cases, and includes data that
are available, partially available, and
unavailable, as well as observations on data
gaps.

The data catalogue is aimed at serving as a

source of reference on climate and
environmental data for the financial sector and
represents a call to action for stakeholders to
collectively improve the availability and
accessibility of climate data.

The DDQ and GN can be found here:

Toolkits | JC3 (jc3malaysia.com)

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CCPT Impact
Impact of CCPT on businesses & what business can do to improve classification

Positive effect of CCPT on business

▪ Capitalise on opportunities to obtain financing and expand business in a sustainable manner

▪ Embedding sustainability within business model and risk management to minimise impact / risk from climate
change

▪ Position companies better locally and internationally

Ways for business to improve CCPT classification

▪ Self-identification of climate & environmental related risk arising from current business model/ strategies

• Leverage on existing resources (e.g., CCPT DDQ, WWF Encore, VBI Sectoral Guides) & build internal
capacity

• Preparation for climate related disclosure (aligning with TCFD/ ISSB)

▪ Work towards establishing remedial measures supported by clear timelines

▪ Continue engagements with FIs

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Thank You

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