GEORGE TOWN: Local banks and companies have issued bonds totalling nearly US$9bil (RM39.8bil) for green enterprises in Malaysia, says Ernst & Young Consulting Sdn Bhd partner Arina Kok.
“Green buildings, renewable energy and sustainable transportation are among the projects receiving green finance,” Kok said.
She was speaking at the Penang Green Finance Conference 2022, supported by Maybank, CIMB Group, UOB Malaysia, SRS Consortium, Fides Certification (M) Sdn Bhd and POWIIS.
The event was officiated at by Penang Chief Minister Chow Kon Yeow.
“Green buildings, for example, are designed to have a low-carbon footprint and are equipped with time-controlled switches, motion sensors, solar panels and other energy-saving technologies.
“These green buildings include new and existing buildings that are retrofitted with energy-efficient features, so that they can be easily leased to companies and organisations seeking to cut their energy consumption and greenhouse gas emissions,” she added.
Kok said potential investors are also exploring the technology of converting dry waste such as plastic, paper and glass into energy.
According to Kok, the return on investment at the global level for renewable power is 422.7%, while fossil fuels stand at 59% over 10 years.
“Over five years, total returns for renewable power amounted to 186.6% while full returns for fossil fuels amounted to 59.3%.”
Kok added that as at November 2022, Malaysia recorded approximately US$4.2bil (RM18.6bil) in new sustainable sukuk issuances.
“The highest growth was seen for sustainable sukuk, driven by the financial sector and government issuances, with proceeds largely used to finance green and social projects,” she said.
UOB Malaysia managing director and country head (wholesale banking) Andy Cheah said for Malaysia, the bank saw green business opportunities in renewable energy and power projects (for example solar), green technology (data centre), fibre-based paper and packaging projects and rain harvesting systems, given the country’s weather.
He added that green real estate is gaining traction for two main reasons.
“Real estate developers have the option to be able to bring their buildings to be green certified. Green buildings are an advantage to their owners in a couple of ways.
“First, they attract high-quality tenants who care about sustainability. Secondly, green buildings offer lower utility costs over the long term.
“The other big opportunity will be around power generation as more economies move away from coal or gas-fired power plants towards renewables, for example solar power, which is very applicable in our part of the world,” Cheah said.
Maybank Investment Banking Group chief executive officer Michael Oh-Lau said the bank saw green financing opportunities for technology-based carbon credit projects in the development of the Voluntary Carbon Market (VCM) ecosystem in Malaysia, especially in energy efficiency, fuel switching and methane capture.
“South-East Asia, as a region with its forest cover and peatlands, holds the potential to be a pivotal contributor to the global market for nature-based solutions.
“The recent launch of the VCM exchange by Bursa Malaysia, under the purview of the finance and environment and water ministries, will help boost transparency and allow entities to buy carbon credits from climate-friendly projects and solutions to offset their emissions.”
He said to accelerate its goal of becoming a regional environmental, social and governance (ESG) leader by 2025, Maybank has decided to take the leadership position by introducing the Sustainable Product Framework (SPF) into its business.
He said this framework acts as a guide on what constitutes sustainable finance.
“It also provides the right tools and clear parameters for designing products and solutions to match the readiness and needs of our large customer base.
“We have also developed policies and processes to manage ESG risks and financing opportunities.
“The approval process for loans to green businesses will adhere to the guidelines and policies set out in our internal procedures as well as those laid out within the SPF,” he said.
Source: https://www.thestar.com.my/business/business-news/2022/12/19/strong-demand-for-green-bonds