Some of the most momentous announcements from Malaysia’s Joint Committee on Climate Change (JC3) conference last week came towards the end of Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus’s speech. She outlined three regulatory moves that she said Bank Negara will be taking in the ‘near term’, which she had earlier indicated would require financial institutions to commit “substantial investments to build the capacity and culture needed to make long-term shifts in business activities that support and are aligned with climate mitigation and adaptation”. This should be a wake-up call for financial institutions that are taking a narrow approach to climate and sustainability issues, especially climate. A limited approach may continue to work for some time on localized issues to connect with and signal support for stakeholders groups, but it falls far short of what regulators are beginning to expect. Corporate social responsibility projects are not an adequate response to climate stress tests and mandatory disclosures, let alone the possibility of increased capital requirements and additional supervisory assessments for financial institutions that lag behind.

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