This includes the implementation of mandatory climate-related disclosures by various governments, regulators and independent bodies to hold companies accountable for their impact on the environment. The world is clearly moving more aggressively on building climate resilience in what is being described as the “decisive decade for climate action". Individual countries and firms cannot stand still. Not just because climate change has severe implications at a domestic level – more so for developing countries – but because global climate actions affect us directly through economic and financial linkages. How we respond is crucial. With the growing traction to sustainability, the 1/5  BIS central bankers' speeches  risk of stranded assets is real and significant. The risk of getting left behind and shut out of key markets will affect our economic competitiveness, lead to a drop in growth and worsen existing inequalities. Ultimately, it is at the local level that the effects of climate-change will be mostly felt – through its transmission to food supply, energy and transport, disease and livelihoods. It is therefore in our collective interests and responsibility to act now, and to act together. As the lifeblood of the economy, the response of the financial sector is crucial on several levels – (i) to safeguard the resilience of the financial system through the identification and management of climate-related risks; (ii) to direct financial flows to low-carbon activities; and (iii) to support the transition by economic agents through appropriate financial and risk solutions.

Over the last two years, we have taken important steps forward within the financial sector in Malaysia. The establishment of the JC3 in 2019 by Bank Negara and the Securities Commission in partnership with the industry, has served as a key focal point for collective climate actions in the financial sector and across multiple stakeholders. The JC3 continues to coordinate and lead efforts in five priority areas. First, we are introducing frameworks for the identification and classification of economic activities that meet climate objectives and are environmentally sustainable. A principles-based taxonomy has been issued to encourage financial flows to activities that support the transition to a lowcarbon and climate resilient economy. With the taxonomy in place, our focus will be to support its consistent and credible implementation within the financial sector. These efforts are being complemented by the issuance of sectoral guides under the Value-based Intermediation Assessment Framework (VBIAF) to help financial institutions conduct ESG risk assessments at a more granular level. Such guides have been issued for three economic subsectors, with three more to be published for consultation by the end of this year. And today, we will be launching the VBI Takaful Framework (VBITF) which outlines the implementation approach for activities in the takaful industry that is aligned with sustainability considerations. Second, we are strengthening practices in the treatment and disclosures of climate risks by financial intermediaries. As part of our supervisory approach, Bank Negara expects financial institutions to consider and integrate climate risks in their business strategies, risk management framework and practices.