Malaysia and other ASEAN markets are stepping-up their policy commitments toward a low carbon economy and fast-tracking sustainable responsible investment to yield positive impact and returns.
According to Trending: Sustainable Responsible Investment in Malaysia and the Region, Malaysia leads in sustainable and responsible investing (SRI) sukuk issuance among the ASEAN6 countries, accounting for US$3.9 billion of issuance value, representing 56% of the total ASEAN SRI sukuk issuance (as of November 2021).
This publication by EY, in collaboration with Capital Markets Malaysia (CMM)’s Sustainable Investment Platform (SIP), offers insights into the growth trend of SRI in Malaysia, Indonesia, the Philippines, Singapore, Thailand and Vietnam and how the ASEAN6 countries, supported by their respective national policies, are embracing SRI and environmental, social and governance (ESG) practices amid the evolving global finance and investment landscape.
Between 2016 to 2020, the ASEAN6 markets saw significant increases, at a 198% compound annual growth rate (CAGR), in sustainable bonds and sukuk issuance for financing growth aligned with ESG principles, with an issuance value estimated to have reached US$29.8 billion as of November 2021. Correspondingly, sustainability-themed Shariah-compliant sukuk grew exponentially higher, at 278% CAGR, and is estimated to have reached US$7 billion in November 2021.
While the maturity of the SRI markets in the respective countries vary, efforts by the ASEAN6 countries to step up on ESG policies and formulate action plans are encouraging the development of conducive, green-focused ecosystems, with tremendous investment and business opportunities and bright prospects for the region’s SRI growth. Currently, over 68% of the total ASEAN6 bonds and sukuk are focused on investments in three key sectors, namely energy, green buildings and transportation.
By 2030, the ASEAN green/low-carbon economy is estimated to provide potential annual business opportunities of nearly US$1 trillion. Meanwhile, the region’s renewable energy sector is anticipated to attract an average investment of US$50 billion per annum from 2025 to 2030.
“EY Malaysia” refers to one or more EY member firms in Malaysia.
