At the KWAP Inspire: Environmental Conference 2018 held in Kuala Lumpur on July 18, convened by Kumpulan Wang Persaraan (Diperbadankan) [KWAP], the members of the Institutional Investor Council (IIC) joined together to make a pledge to support financial institutions to fulfil their crucial role in driving sustainable development in Malaysia and across ASEAN.
This effort includes commitments to drive responsible lending practices by banks and to build members’ capacity on responsible investment.
While the Malaysian financial sector has been a regional leader in sustainable finance in some respects, Malaysian banks are not yet disclosing enough about how they address environmental and social (E&S) risks and opportunities in their financing activities and portfolios.
Bank Negara Malaysia’s Value-Based Intermediation will provide direction to Islamic banks on this regard, but institutional investors can offer further support to ensure that all banks improve how they manage their portfolio E&S risks and opportunities.
“One way that financial institutions can drive sustainable development is by mainstreaming ESG in their loan portfolios. This can be done by directly linking the cost of, and access to, loan capital to clients’ environmental and social performance across the entire lending portfolio”, said Dato’ Wan Kamaruzaman, the Chief Executive Officer of KWAP and the Chairman of the Institutional Investor Council.
“In addition to this, financial institutions can develop ‘green’ products to finance environmentally sustainable projects, as they transition their portfolios away from non-green investments”, he added.
The new commitment by the IIC members re-affirms their dedication to investor stewardship, a key aspect of responsible investment and the Malaysian Code for Institutional Investors.
To further build out their capabilities in this rapidly-developing area, IIC members also recognised the need to engage with trusted experts to improve their understanding of how to evaluate and address material E&S risks and opportunities in their investments.
In summary, the IIC members pledged to:
- Engage portfolio banks to encourage better management of environmental and social risks and opportunities, including adoption and disclosure of relevant policies and processes across all their business lines and incorporation of climate and material ESG issues into strategy and board responsibilities.
- Advance the adoption and application of best practices in responsible investment and stewardship, both through the above engagement and a commitment to build capacity on responsible investment, beginning with the organisation of knowledge sharing sessions.
A total of twelve IIC members joined together to take the pledge. They are:
- Kumpulan Wang Persaraan (Diperbadankan) [KWAP]
- Employees Provident Fund (EPF)
- Lembaga Tabung Angkatan Tentera (LTAT)
- Permodalan Nasional Berhad
- Khazanah Nasional Berhad
- Lembaga Tabung Haji (LTH)
- Minority Shareholders Watch Group (MSWG)
- Social Security Organisation (SOCSO)
- Aberdeen Islamic Asset Management Sdn Bhd
- Private Pension Administrator Malaysia (PPAM)
- ValueCAP Sdn Bhd
- Life Insurance Association of Malaysia
Considering the significant size of the combined assets under management of these IIC members, they are in a prime position to both lead by example and influence other financial institutions to further take up responsible lending and investment practices.
The pledge made by the IIC members was announced at the KWAP Inspire: Environmental Conference 2018, which is jointly hosted by KWAP together with the World Wide Fund for Nature (WWF) as Knowledge Advisor. The two-day conference brought together environmental and investment experts to discuss issues critical to sustainable and responsible investment.
Together with the reading of the pledge, the IIC also launched its new website, www.iicm.org.my that serves as a platform for sharing and information on its agenda and initiatives with the industry players.
About Kumpulan Wang Persaraan (Diperbadankan)
Kumpulan Wang Persaraan (Diperbadankan) [KWAP] or the Retirement Fund (Incorporated) was established on 1st March 2007 under the Retirement Fund Act 2007(Act 662) replacing the repealed Pensions Trust Fund Act 1991 (Act 454).
KWAP manages contributions from the federal government and relevant agencies to obtain optimum returns on its investments through sound management and investment of the Fund in equity, fixed income securities, money market instruments, and other forms of investments as permitted under the Retirement Fund Act 2007 (Act 662). The Fund shall be applied towards assisting the Federal Government in financing its pension duties.
In 2015, KWAP was officially appointed as an agent of the Federal Government for the purpose of pension payment, gratuity, or other benefits granted under any written law from the Consolidated Fund as agreed between the Federal Government and KWAP.
Visit www.kwap.gov.my for more information.
For media inquiries, please contact:
Assistant Vice President, Public Relations and Communications,
Corporate Affairs Department
Kumpulan Wang Persaraan (Diperbadankan) [KWAP]
Contact Number: +603-2174 8000, ext 8669 / +6016-2224 911
Hairuddin Mohd Noh
Senior Manager, Corporate Reputation
Contact Number: +6017-792 5212
Executive, Corporate Reputation
Contact Number: +6018-350 8298