KUALA LUMPUR: The Joint Committee on Climate Change (JC3) members welcomed the finalisation of the Reference Guide on Climate Risk Management and Scenario Analysis that will be issued for public consultation in December.
The committee held its sixth meeting on December 9 to discuss the progress of its current initiatives and priorities for 2022 to strengthen further the Malaysian financial sector's capacity to address climate risk.
In a statement today, the committee said the Reference Guide sets expectations for financial institutions to integrate climate-related risks considerations in financial institutions' business and risk strategies.
JC3 said that a TCFD-aligned Application Guide for disclosure of climate-related risks by financial institutions will also be issued for public consultation in January 2022.
As an extension of this work, disclosure guides for businesses will be developed in 2022.
"JC3 members supported the proposal for financial institutions to make mandatory TCFD-aligned climate-related financial risk disclosures from 2024.
"This means that all financial institutions will minimally adopt the basic recommendations set out in the Application Guide and are encouraged to adopt stretch recommendations in line with their climate risk exposure and complexity of operations," it said.
JC3 said financial institutions regulated by BNM are expected to adopt stretch recommendations that are fully aligned with TCFD disclosures by the end of 2024.
"This will not only provide greater transparency on how climate risk considerations are integrated into business decisions and risk management of financial institutions but will also help drive action towards more effective risk mitigation and better adaptation to climate change.
"JC3 will seek feedback on this proposal as part of its consultation on the Application Guide and Reference Guide on Climate Risk Management and Scenario Analysis," it said.
The JC3 is a platform established in September 2019 to pursue collaborative actions for building climate resilience within the Malaysian financial sector.
The JC3 is co-chaired by Bank Negara Malaysia deputy governor Jessica Chew Cheng Lian and Securities Commission (SC) deputy chief executive Datuk Zainal Izlan Zainal Abidin, with members comprising senior officials from Bursa Malaysia and 19 financial industry players as well as relevant experts.