Bank Negara Malaysia (BNM) could further accelerate green investment by adjusting reserve requirements, offering preferential funding for sustainable projects and incorporating environmental considerations into its monetary-policy operations, according to international research and advocacy group Positive Money.
The recommendations were issued as the two-day JC3 Journey to Zero Conference 2026 opened at Sasana Kijang on Monday. The conference, jointly driven through the Joint Committee on Climate Change (JC3), brings together regulators, financial institutions, investors and businesses to discuss transition finance, capital mobilisation and climate and nature resilience.
Positive Money said BNM was already among the region’s more advanced central banks on environmental issues. Its 2025 East and Southeast Asia Green Central Banking Scorecard, which assessed central banks and financial regulators across 13 ASEAN+3 economies, placed Malaysia second behind China.
However, the organisation said Malaysia could go further by using a broader range of monetary and financial-policy tools to direct capital towards low-carbon investment.
Among its six proposals, Positive Money suggested BNM consider lower reserve requirements for banks on qualifying green lending, arguing that this could reduce the cost of financing renewable energy and other transition infrastructure.
It also proposed preferential central-bank lending rates for financial institutions that channel funds into green projects, citing similar approaches adopted elsewhere in Asia.
A third recommendation involves BNM’s collateral framework. Positive Money said environmental characteristics could be considered when determining which assets are eligible as collateral for central-bank lending and the value assigned to them.
The organisation also proposed that BNM further “green” its own investment portfolio by increasing exposure to environmental, social and governance-linked assets while reducing holdings associated with higher-carbon activities.
Positive Money’s fifth proposal calls for closer coordination between BNM and the Securities Commission Malaysia on sustainable-finance classifications and disclosure requirements.
Malaysia is already moving in this direction. BNM and the Securities Commission said in August that the ASEAN Taxonomy would form the foundation of the Malaysia Taxonomy, with JC3 working on practical implementation guidance and tools for financial institutions and businesses.
The think tank’s final recommendation is for BNM to deepen cooperation and research partnerships with other central banks and financial regulators, particularly in Asia, to support mobilisation of financing for clean-energy and other transition projects.
Positive Money senior researcher Joe Herbert said central banks had an important role in influencing how capital is allocated as economies respond to climate-related risks.
He said Malaysia’s second-place showing in the organisation’s regional scorecard reflected progress already made, but argued that continued policy development would be necessary as other central banks expand their own sustainable-finance frameworks.
