commendable. but, we must not forget the long road ahead and work still to be done to achieve 2050 in an orderly and just manner. the bank's experience in engaging with multiple stakeholders offers some insights as to the additional elements needed to further propel our transition. allow me to share these insights to cap off our discourse today – that is c for communication, a for alignment, and p for proactivity. 1 / 2 bis - central bankers'speeches communication. the economy's transition doesn't just happen in high powered boardrooms and government offices. it happens in the everyday decisions made by households and small business owners. 97. 4 % of all businesses in malaysia are smes, contributing 37. 4 % of gdp. our engagements reveal that these significant contributors often have low levels of knowledge on sustainability. communication is thus key. banks and industry leaders, those seated in this room, have the responsibility to communicate and create the awareness and acceptance of your clients on the importance, risks and opportunities related to the impacts of climate change. alignment. 2050 is the goal for malaysia. but, it is not one that can be achieved if we each march to the beat of our own drums. our collective effort is key if we are to achieve a just and orderly transition. aside from alignment between institutions, even more critical is the need for alignment within institutions. climate objectives decided at the board and management level must be cascaded to the frontlines and across branches to ensure that clients have the support needed regardless of where they are situated. in combination, this alignment will ensure that efforts by each institution are complementary and achieve the maximum impact. proactiveness. the sixth assessment report by the intergovernmental panel on climate change states irrevocably that the window of opportunity to reach the paris agreement goal of limiting global warming to 1. 5 degrees celsius above pre - industrial levels is rapidly closing. decisions of today already have a profound impact on tomorrow's future. financial institutions must be proactive in ensuring that your own institutions and your clients are prepared in the face of a changing climate and economy. financial institutions must both be innovative in developing relevant and effective financing solutions, and facilitate innovation by supporting green technologies or nature - based solutions that may be the key to unlocking a green future for malaysia. adequately addressing the needs of your clients requires addressing the needs of the future industries that your clients will be operating in. the bank is working actively to enhance

be a demand for “ professional directors ”. secondly, financial innovation, including in the area of islamic finance, will continue to expand as institutions seek their own competitive edge. while we should encourage such innovations within the bounds of prudence, the implication of financial innovations on governance arrangements and practices must be properly understood. for example, the introduction of new financing structures based on different islamic contracts such as equitybased or risk - sharing concepts will likely demand different and more robust governance arrangements. in this context, the bank is introducing shariah and operational standards to promote greater legal and operational certainty and quality in islamic finance transactions. these standards will set out, among others, clear duties and responsibilities of the various parties involved in islamic contracts with the aim to ensure end - to - end shariah compliance. at the same time, there will be enhanced disclosure requirements on risks associated with potential misconduct and negligence. in such circumstances, we expect the board to provide leadership, guidance and oversight in ensuring that the needs and rights of all parties are adequately and appropriately managed. thirdly, the implementation of global regulatory reforms will pose further challenges for the industry. while the reforms are well - intended, the complexity and impact of the reforms to business should not be underestimated. increasingly, there seems to be a trend on the “ extraterritorial ” application of laws and regulatory requirements, which have implications on other jurisdictions. the extraterritorial effect of such laws may require changes to existing practices and may involve substantial costs in terms of system change and improving monitoring capabilities. at the board and senior management levels, an adequate understanding of the potential impact of these trends and regulatory changes is critical to help the organisation in setting business priorities while ensuring full compliance with emerging regulatory requirements. with much at stake, board members must take seriously their responsibility to drive the corporate governance agenda forward. one important lesson we ought to learn is that weak governance causes the failure of financial institutions. the costs of salvaging a failed institution far outweigh the costs incurred to prevent such a failure. over the long term, the failure of institutions would also cause businesses and households that depend on financial institutions for funding to be in a difficult position, erode public trust that would take many years to restore and consequently result in more intrusive and prescriptive regulation of the industry. as stewards of financial institutions, boards and senior management bear the responsibility of ensuring that regulatory policies translate into operational practices. rules must be embedded into the day