Malaysian banks are ideal candidates to issue green bonds, sukuk — RAM

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KUALA LUMPUR (Oct 14): Malaysian banks are expected to issue green bonds and sukuk to spur the growth of the renewable energy sector, said RAM Sustainability chief executive officer Promod Dass said.

A statement from RAM Sustainability today quoted him as saying at a recent conference that the sound credit profiles of Malaysian banks and their ability to utilise issuance proceeds to fund green projects made them ideal candidates as issuers of green bonds and sukuk.

“Issuing green bonds and sukuk is a tangible means for banks to signal to their stakeholders and the capital markets their response to climate change and their commitment to responsible finance,” he said during a panel session at the 10th International Greentech and Eco Products Exhibition and Conference Malaysia on Friday (Oct 11).

In line with the thrust towards achieving Malaysia’s targeted renewable energy mix of 20% by 2025, the government announced during the 2020 Budget tabling last week that the Green Investment Tax Allowance and Green Income Tax Exemption incentives would be extended to 2023.

“The issuance proceeds from bank green bonds can be utilised to fund creditworthy and eligible green projects which, on their own, may be too small to tap the capital markets directly. This will further catalyse the development of Malaysia’s renewable energy sector,” Dass said.

He added that bank green bonds and sukuk could also be in a sweet spot for institutional investors that adhered to responsible investing principles and were beginning to seek out green assets for their portfolios.

“Based on Climate Bonds Initiative’s Green Bonds Market Summary (April 2019), the issuance of green bonds by financial institutions and development banks accounted for 20 per cent of developed markets’ overall green bond issuance during the first quarter of 2019,” he said.

RAM Sustainability, a wholly-owned subsidiary of RAM Holdings Bhd, is the first ASEAN-based provider of sustainability ratings and second opinions. — Bernama