Featured Product

    BNM Publishes Guidance on Climate Change and Principle-Based Taxonomy

    April 30, 2021

    BNM finalized the guidance on climate change and its impact on businesses and households as well as the broader economy. The guidance introduces a principle-based taxonomy for financial institutions to assess and categorize economic activities according to the extent to which the activities meet climate objectives and promote the transition to a low-carbon economy. The guidance is applicable to financial institutions that include licensed banks, investment banks, Islamic banks, international Islamic banks, and prescribed development financial institutions, with an effective date of April 30, 2021.

    The guidance aims to facilitate standardized classification and reporting of climate-related exposures to support risk assessments at the institution and systemic levels, strengthen accountability and market transparency, and encourage financial flows toward supporting climate objectives. Financial institutions can leverage the taxonomy in the design and structuring of green finance solutions and services to accelerate development of green sectors and activities and decarbonization efforts. BNM had issued, in December 2019, a discussion paper on climate change and principle-based taxonomy. Following the feedback received during the consultation, the final guidance document features major enhancements in the following areas:

    • Strengthened the guidance document with the introduction of a progressive system of transition categories to acknowledge concrete transition efforts and commitments by businesses to adopt sustainable practices
    • Provided greater clarity and guidance for the assessment of guiding principles, including incorporation of broader environmental outcomes through the principle of no significant harm, with focus on how business operations affect pollution, biodiversity and resource efficiency

    This guidance complements the guidance document on value-based intermediation financing and investment impact assessment framework, which BNM had issued in November 2019. The guidance document on value-based intermediation financing lays the foundation for environmental, social, and governance (ESG) considerations in the provision of financial services, to generate a positive and sustainable impact on the economy, community, and environment. 


    Related Links

    Effective Date: April 30, 2021

    Keywords:  Asia Pacific, Malaysia, Banking, Insurance, ESG, Climate Change Risk, Taxonomy, Sustainable Finance, Islamic Banks, Reporting, BNM

    Featured Experts
    Related Articles

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582