Frameworks are in place to facilitate the adoption of sustainable finance by FIs (climate change and principle-based taxonomy, Performance Measurement Framework (PMF) and Value-Based Intermediation (VBI)) My third point is that various frameworks are now being put in place to empower DFIs in sustainable finance, and DFIs can already step up efforts in this space. For example, BNM’s climate change and principle-based taxonomy facilitates all FIs to be part of the driving force that promotes orderly transition towards a low-carbon future. Other frameworks focus on creating incentives that would shape DFIs’ behaviour to be more in tune with their developmental roles. The adage “what gets measured gets managed” reflects the 3/5  BIS central bankers' speeches  importance of building a structured and holistic measurement framework for DFIs. This will support DFIs to pursue national economic and social well-being while simultaneously support an orderly transition of the economy towards achieving sustainability goals. In this, it is particularly pertinent for DFIs to advocate accountability, transparency and efficiency since DFIs are also public institutions. Towards this, DFIs that are part of the Value Based Intermediation or VBI community are encouraged to apply impact-based disclosure on value-based practices and financial solutions contributing to the triple bottom line (people, planet and prosperity). Institutions are required to disclose an optimal set of information to stakeholders with an objective to generate intended market discipline and promote stakeholder activism. Similarly, the Performance Measurement Framework or PMF is anchored on the concept of additionality creation by DFIs.

Additionality is defined as the positive impact attributable to DFIs beyond purely commercially-driven considerations, and this resonates well with the intent of sustainable finance. Under the framework, an achieving DFI creates additionality by addressing market failures and creates values for the economy. This could be in generating employment, increasing income level as well as creating economic spill-overs for local communities; It could also be in successfully mobilising private investments or financing to support strategic or underserved sectors or markets through innovative financial instruments; or Creating an enabling environment for their customers to flourish by actively contributing to the sound design and implementation of public policies. During this journey of PMF, one of our Malaysian DFIs has been piloting an impact assessment framework that was jointly developed with the World Bank, that provides a holistic and structured end-to-end assessment which includes accounting for selected ESG aspects. This DFI has reported some preliminary 2020 results wherein 2,600 jobs were created and an estimated 2,628 GWh of clean energy was produced, among other reported impacts. We look forward to other impacts and achievements garnered through the delivery of sustainable finance. A paradigm shift that fosters collective action and cultural change is the impetus to a successful implementation of sustainable finance. Finally, it’s worth reminding that while regulation can be an important driver in elevating and mainstreaming sustainable finance, it is the sum of many parts which can truly create a seismic change.