Navigating Malaysia’s Green Taxonomy: A Pathway to Sustainable Development – Evidence shows that Malaysia’s climate is facing a significant crisis, with surface mean temperatures increasing from 0.13°C to 0.24°C per decade between 1969 and 2016 (Ministry of Environment and Water, December 2020). With this in mind, it isn’t difficult to see why adopting green taxonomy is so crucial for integrating sustainability into the country’s sustainability and economic frameworks.
What Is The Green Taxonomy?
The Green Taxonomy classification system is based on eco-friendly economic or business activities that support efforts to protect the environment and mitigate further climate change. Green taxonomy frameworks like the CCPT (Climate Change and Principle-based Taxonomy) make it easier for financial service actors to classify activities’ environmentally friendlyness when developing a financial service product portfolio. Thanks to the green taxonomy, it’s far easier to determine which investments are considered “green.”
A Global Standard Adapted For A Country’s Specific Specialities
When developing taxonomies specific to individual countries, the EU taxonomy is frequently used as the key reference point, allowing it to be adapted and modified to suit the nation’s best industries and unique environmental priorities.
Malaysia’s also developing SRI (Sustainable and Responsible Investment) taxonomy will likely focus on areas that align with the country’s policies, most likely sustainable agriculture, renewable energies, and palm oil production.
Green Taxonomy in Malaysia
Malaysia’s adoption of green taxonomies couldn’t be more important in attracting sustainable investments, mitigating future climate risks, and, most importantly, driving the nation’s transition towards becoming a low-carbon economy. Supported by both the World Bank and the Central Bank of Malaysia, the country’s green taxonomy has an impact extending to numerous sectors.
The MIDA (Malaysian Investment Development Authority) is vital in supporting green technology investments via policies and incentives, and these initiatives are aiding manufacturing companies in adopting more sustainable practices. However, some challenges for organisations, especially SMEs, include the need to align with regulations, build capacity, and obtain financial support. Nevertheless, green taxonomy can offer a significant opportunity to drive Malaysian economic growth by attracting sustainable investments.
Benefits of Green Taxonomy for Malaysia’s Future
Implementing Malaysia’s green taxonomy has many benefits, not least of which is attracting more international investment while contributing to key environmental objectives.
Some of the advantages green taxonomy can offer to Malaysia to ensure its future is positive include:
- The establishment of a common stakeholder language for more effective communication.
- The alignment of investments with commitments to global climate goals.
- The provision of consistency and clarity in regulatory and financial practices.
- An enhanced understanding of the various environmental risks.
- Support of a diverse range of green investments.
- The contextualisation of low-carbon transition and climate resilience data.
- The reduction of reputational risk and encouragement of sustainable business practices.
Green Taxonomy – Ensuring A Positive Environmental Future
As Malaysia continues to develop its green taxonomy, businesses operating in the country should examine their ESG (environmental, social, and governance) strategies more closely. AsiaESG can offer a comprehensive ESG solution that makes the ESG strategy development, reporting, and marketing process more efficient, simple, and effective.
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