Malaysia is prime issuer of sustainability Sukuk in ASEAN, with US$3.9 billion of total issuance
Malaysia leads in sustainable and responsible investing (SRI) sukuk issuance among the ASEAN6 countries, accounting for US$3.9 billion of issuance value or 56% of the total ASEAN SRI sukuk issuance, as of November 2021.
This is according to Trending: Sustainable Responsible Investment in Malaysia and the Region, a research publication released by Ernst & Young Consulting Sdn Bhd (“EY Malaysia”) and Capital Markets Malaysia (CMM)’s Sustainable Investment Platform (SIP) on the growth trend of sustainable and responsible investing (SRI) in Malaysia and its five ASEAN neighbours, i.e., Indonesia, the Philippines, Singapore, Thailand and Vietnam (collectively, the ASEAN6 countries).
The publication offers insights into how the ASEAN6 countries are embracing SRI and environmental, social and governance (ESG) practices amid the evolving global finance and investment landscape, and are supported by their respective national policies.
It said that Developments in the SRI arena have catalysed the exponential growth of ASEAN sustainable bonds and sukuk. Between 2016 to 2020, the ASEAN6 markets saw significant increases, at 198% CAGR, in sustainable bonds and sukuk issuance for financing growth aligned with ESG principles, with an issuance value estimated to have reached US$29.8billion as of November 2021. Correspondingly, sustainability-themed Shariah-compliant sukuk grew exponentially higher, at 278% CAGR, and is estimated to have reached US$7billion in November 2021.
Dato’ Abdul Rauf Rashid, Malaysia Managing Partner, Ernst & Young PLT said, “We are seeing Malaysian corporates and organisations, along with their ASEAN peers, significantly stepping up their adoption of ESG strategies and practices. These actions will enhance their resilience and long-term sustainability.”
Progressive actions in alignment with global sustainability initiatives augur well for the region’s future SRI growth
ASEAN6 regulatory authorities are developing policies and action plans in line with global policy developments and initiatives to achieve the Sustainable Development Agenda by 2030. These include sustainable agendas/green plans, sustainable investment, power or energy development plans and climate change adaptation or mitigation plans.
The ASEAN6 stock exchanges are progressively adopting SRI and ESG practices, in tandem with these developments. Further, ASEAN6 stock exchanges require public listed companies to submit ESG disclosure information and most of them have launched sustainability-equity indices as a transparent platform for investors to track the performance of companies with good ESG practices.