In November 2019, the Bank issued the “Value-based Intermediation Financing and Investment Impact Assessment Framework – Guidance Document” (VBIAF). This provides guidance on the assessment of financing applications and investment opportunities, taking into consideration economic, social and environmental impacts. VBIAF may also serve as a reference for the wider industry that seeks to incorporate ESG risk considerations in their own risk management system. We are also working with our industry partners to produce three sector-specific guides for the VBI Impact Assessment Framework, namely, palm oil, energy efficiency and renewable energy. These will be issued for consultation in 2020 to supplement the VBIAF with technical and step-by-step procedures for industry players in those sectors. Ladies and gentlemen, The sustainability agenda, carried by the VBI initiative for the Islamic Finance sector, complements directly to the national aspiration in this area. To date, the country is progressively marching towards growth with sustainability following its commitment to the UN Sustainable Development Goals (SDGs) and as a signatory to the Paris Agreement to tackle climate change. Strategic plans involving various sectors such as green technology and renewable energy have been and are being implemented to achieve the SDGs. In 2018, Malaysia ranked 55 out of 156 countries in terms of its overall SDG performance and is on track in increasing affordable and clean energy to fulfill this particular SDG7. Under the 11th Malaysia Plan (2016 – 2020), green growth has been identified as the game changer in bringing Malaysia towards a sustainable socio-economic, development path.

Since 2016, several new legislations, policies and action plans were introduced, while existing financing mechanisms were strengthened to support the uptake of green initiatives. As 2020 approaches, Malaysia is committed to continue implementing its strategic long-term plans and green friendly policies. Budget 2020 is reflective of this commitment, with the allocation of a matching fund of RM10 million towards a joint United Nations SDG-government fund to co-finance SDG initiatives 2/5  BIS central bankers' speeches  in Malaysia. While government funding is important to realise the SDGs, most of the investments would need to be sourced from the private sector. An annual target of RM350 billion from private investments by 2020 was identified in the national roadmap for the SDGs, in line with achieving the targets of the 11th Malaysia Plan. Thus, financial institutions are expected to embark on new financing and investment opportunities towards sustainable projects and practices. There is a large financing gap needed to be filled to realise the SDGs in developing countries, which is estimated to be between USD 2.5 – 3 trillion annually. One major sector to drive a green economy is renewable energy. Projections provided by the Sustainable Energy Development Authority (SEDA) estimates that RM 33.5 billion is needed by private sector financing to achieve the national target of 20% installed capacity of renewable energy by 2025 in Malaysia. Beyond that, financing is needed for other important sectors such as education, healthcare, social entrepreneurship and food production to galvanize sustainable development.