Here in Malaysia, buildings consume almost half (48%) of the electricity generated in the country. In response to this, green buildings were conceived, prioritising environmental and health concerns as well as resource efficiency throughout their life cycle. In the process, they also respond to the changing preferences of an increasingly environmentally conscious population. As a country, Malaysia has committed to the target of reaching Net Zero emissions as early as 2050. In line with this and the priorities laid out in the 12th Malaysia Plan, state and city councils have increasingly stepped up efforts to spur the greening of their respective jurisdictions. DBKL for instance has issued the Kuala Lumpur Climate Action Plan 2050, which details out the actions necessary to achieve the goals of the Paris agreement. While we will be mainly focusing on green housing at this event, it is important not to forget that this is a cross-cutting agenda that requires many different parts of the ecosystem to work effectively. With climate change, however, we are not simply pursuing an aspirational goal. We are dealing with an existential treat for which bold and decisive actions are needed to correct what has been described as the “greatest market failure the world has ever seen”. Central to these actions is the remarkable capacity of the private sector to innovate solutions that will move us closer to our climate goals, and our collective responsibility to harness that capacity. Physical risks associated with climate change are already with us and are rising.

Their response in turn will affect how financial institutions interact with businesses going forward. Beginning from July this year, financial institutions have started reporting their climate related risk exposures based on the Climate Change and Principle-based Taxonomy developed for the financial sector to assess and classify economic activities within their portfolios. Aside from building a strong foundation for risk assessments and disclosures, the taxonomy is expected to encourage the flow of capital towards supporting transition activities. We recognise the need to minimise macroeconomic and social dislocations in the short term as we transition to a low carbon economy. The financial sector taxonomy therefore does not adopt a binary classification of green and brown activities, but also recognises credible efforts by businesses to actively reduce the harm that their operations might pose to the environment during transition. Based on an analysis of their material exposures to climate-related risks, financial institutions would be required to take actions to address high and unmitigated exposures. We have also strengthened the standards that we expect financial institutions to meet in managing climate related risks. This includes an expectation for financial institutions to work with and support their customers in managing their transition. More to the point, if businesses are committed and willing to undertake changes to reduce their GHG emissions and green their operations, the financial sector should help them make the transition. This may take the form of appropriate financing or protection solutions and advisory services.