Tag: MYFS

  • Digital Finance in a nutshell, and where Malaysia stands

    Digital Finance in a nutshell, and where Malaysia stands

    Malaysia’s Budget 2023 plans towards digitising our industries, particularly digital finance

    Based on Budget 2023 tabled on 28 October 2022, there are a few touchpoints that will help expand digital financial services in Malaysia, powering inclusive growth in the digital economy. Firstly, a service tax exemption was proposed for online banking or financial services and digital payment services effective until 2025 (Ministry of Finance Malaysia, 2022). This will incentivise recipients of digital payment services and local non-bank digital payment services providers, such as payment instrument issuers, merchant acquirers, and payment system operators to expand their business during the tax exemption period until 2025.

    Following this, there are initiatives to help increase the usage of digital finances such as e-Pemula, where e-wallet credit worth RM400 million will be distributed to 2 million youths and another RM800 million credited to individuals from M40 households through e-wallet as well (Ministry of Finance Malaysia, 2022). This form of financial assistance is effective in reaching broader communities due to increased accessibility and convenience through technological advancement and the prevalence of e-wallets.

    Another initiative to increase usage and confidence in digital financial services in Malaysia is taking measures to curb online scams. For example, forming the National Scam Response Centre (NSRC), tightening internet banking security by discontinuing OTP for high-risk transactions, and organising the Financial and Digital Literacy Programme to raise awareness on online scams(Ministry of Finance Malaysia, 2022). 

    Additionally, there are initiatives to increase digital network connectivity, including the Jalinan Digital Negara project (JENDELA) Phase 2, which aims to provide 100% internet coverage in populated areas (Ministry of Finance Malaysia, 2022). An RM700 million allocation was budgeted to be spent on JENDELA in 2023, and it’s expected to improve digital connectivity in 47 industrial areas and nearly 3,700 schools. Also, Digital Nasional Bhd is to expand the 5G network nationwide to cover 70% of highly populated areas in 2023, with infrastructure expenditure allocation worth RM1.3 billion. This will increase the reach of digital financing and allow it to be utilised by the masses, especially those in rural areas. These initiatives are estimated to benefit more than 1 million people in rural areas and reduce the unbanked population from 11% to 8% by 2025. According to World Bank, 88% of Malaysians were considered the banked population in 2021, which indicates their accessibility to financial services regardless of conventional or digital. The net 12% of the unbanked population mostly came from rural areas and was equivalent to 7 million people who could not access any financial services.

    The Budget 2023 is a great step forward in line with the digital finance movement. This is a dire need in Malaysia due to the country’s fast growth rate in mobile banking and e-money transactions, which quadrupled to RM800 billion in 2021. Moreover, the existence of financial inclusion gaps among underserved communities such as women, gig workers, and lower-income earners require significant attention (Hani, 2022). With the rise of digital banking, the credit gap between Malaysians is expected to be filled through the implementation of a personalised financing structure that benefits underserved communities (The Edge Markets, 2022). This will also lead to more convenient and accessible financial services, looking beyond traditional credit scores and home ownership to ensure individuals’ and SMEs’ competitiveness in this rapidly-growing global digital economy.

    However, Malaysia still has a long way to go when it comes to the implementation of digital finance. To promote digital inclusion, Malaysia must first be able to provide 100% internet coverage in the country to make progression into the digital economy a reality (NST Business, 2022). 

    “The government may propose that telco providers offer free data or whitelist certain registered apps necessary for online banking and e-wallets,” says Saify Akhtar, the director of the strategy at Pertama Digital Bhd (NST Business, 2022). He also hopes the government considers allowing third parties to authorise access to specific data via Application Programming Interfaces (APIs) because the regulatory framework for open APIs is currently limited to card and insurance data accessed by data aggregators (NST Business, 2022). It is also important to highlight that there is still low public confidence in digital banking due to the rise in online fraud and scams. Thus, it is crucial that the government prioritises educating its people, particularly senior citizens, about fintech and mobile banking (NST Business, 2022).

     

    How is digital finance different from traditional finance?

    Traditional finance refers to the traditional financial system, which is centred around brick-and-mortar financial institutions such as banks and credit unions and involves the use of physical financial instruments such as cash, checks, and credit cards.

    On the other hand, digital finance refers to the use of digital technologies to deliver financial services such as mobile banking, electronic payment systems, and online lending platforms. Digital finance is a renowned way of financing and usually provides a lower entry threshold and aims to deliver a better customer experience.

     

    Key differences between traditional finance and digital finance

     

    Difference Traditional Finance Digital Finance
    Presence Traditional finance exists in the form of physical bank branches and serve walk-in customers. Digital finance usually does not exist physically as all services are provided through digital means
    Convenience Traditional finance is less accessible, especially in rural areas where there may not be a physical financial institution nearby. Digital finance is generally more convenient than traditional finance, as it allows people to access financial services from anywhere and at any time.
    Accessibility Traditional finance is limited. People have to visit physical banks, and it is only available during working hours. Digital finance is more accessible, especially to underserved populations. It enables people to access financial services through their smartphones or digital gadgets.
    Security Traditional finance might face risks of data leaks from the bank’s centralised server. Digital finance is vulnerable to cyberattacks and malware apps which could leak the users’ data and give malicious parties access to info without the users’ knowledge. 
    Speed Traditional finance transactions can take longer to process, especially if they involve physical documents that need to be mailed or delivered. Digital finance transactions can be completed relatively faster as they can be processed electronically in real time.
    Efficiency Traditional finance is less efficient as its services are carried out by bank officers, and these officers only can serve one customer at a time. Digital finance is more efficient in serving customers. It can serve a bulk amount of customers at the same time without the need for human capital.
    Cost Traditional finance incurs a lot of operating and fixed costs. Digital finance has relatively low operating costs as it does not have a physical presence and requires only software maintenance to keep it running.
    Customer Service Traditional banks can provide tailored one-to-one services to customers and yield a higher customer satisfaction rate. Digital finance is still lacking in providing a satisfactory customer experience as no human interaction is involved and the system may sometimes be down for maintenance.
    Contact Customers can have face-to-face contact in traditional finance. Customers can only access electronic contacts in digital finance.

     

    Which industries in Malaysia are pioneering the digital finance movement?

    In general, the three branches in the finance industry that experienced the biggest digitalization are the payment, lending and e-wallet industries, which combined occupy more than half of the market of fintech companies in Malaysia. Specifically, the payment industry leads the market, with 60 Fintech companies launching products and apps that hold about 20% of the market size. This is due to the surfacing prevalence of digital payment usage, which boomed during the Covid-19 Pandemic as consumers’ paying behaviour largely switched from physical to digital or cashless to reduce unnecessary interactions such as the exchanging of money notes. 

    Next, the lending industry also experienced tremendous growth, represented by a total of 55 companies equivalent to 18% of the market size among Malaysia’s Fintech companies. Notable companies and apps such as Boost Credit, Bigpay, Capbay, and more are platforms that provide lending services outside of conventional banking coverage. They tend to be laxer on the minimum amount of borrowing allowed and their repayment terms. However, these fintech companies might charge higher interest rates than conventional banks as they bear higher risk by dealing with customers of a lower credit score threshold. 

    The third largest digital finance industry is the e-wallet industry, with a total of 43 companies that hold 14% of the market among Malaysia’s Fintech companies. Apps like Touch N’ Go e-Wallet, Boost, Alipay, and ShopeePay have high market penetration among current consumers, especially youths due to its usage convenience and instantaneous transaction speed 

    The three industries mentioned above represent the biggest branches of the digital finance industry in Malaysia and have been growing rapidly in previous years. This rapid growth is also driven by changes brought about by the Pandemic and changing consumer behaviours, such as increased adaptation to technological changes. Many digital finance industries are still expanding quickly. The following section lays out an overview of the trends in the digital finance industry over the past several years.

     

    Market breakdown of Malaysia’s digital finance industry

    The digital finance industry can be granularly broken down into 10 branches. These niches are relatively new industries that have just started their expansion into Malaysia’s market. The biggest player in Malaysia’s digital finance market is the digital payment industry. It consists of companies that marketize various methods and technologies used to facilitate electronic transactions. This can include online banking, mobile payments, digital wallets, and payment gateways among other things. The digital payment industry is a key component of the broader financial technology ecosystem in Malaysia and carries several unique attributes such as vast accessibility, especially to the unbanked population, usage convenience, and speedy transactions.

    The lending industry in the digital finance market is made up by finance companies that are dedicated to lending money to consumers, typically serving the group of people that are unable to borrow from conventional banks. Digital lending apps cover various purchases regardless of their amounts, ranging from car purchases to home appliances and phones. However, digital lending companies might charge a higher interest rate than conventional banks as they impose less stringent standards on their applicants and thus bear a higher risk of default.

    The e-wallet industry refers to the companies that marketize financial applications that allow users to store money, make transactions, and track payment histories on devices like phones and tablets. Digital wallets usually do not require a bank account; instead, consumers can place funds online, which provides underbanked communities the chance to access financial services, thus enabling broader financial inclusion. E-wallets like Touch N’ Go function as more than just a platform to send and receive funds; they usually also have in-built functions for transport services and insurance purchase. 

    The digital remittance industry refers to the companies that provide digital technologies and platforms to facilitate the transfer of money across borders. This can include online platforms, mobile apps, and other digital channels that allow individuals and businesses to send and receive money internationally. The digital remittance industry has grown rapidly in recent years and is transforming the way people send and receive money across borders, making it faster, cheaper, and more convenient. 

    The Insurtech industry refers to the companies that have adopted technological innovations to design and find the balance between cost savings and efficiency in the current insurance industry model. Insurtech explores avenues that large insurance firms have less incentive to exploit, such as offering ultra-customized policies and social insurance and enabling dynamic price premiums according to users’ behaviour. Overall, Insurtech is aimed at making the insurance industry more efficient, cost-effective, and customer-centric by using technology to streamline processes, increase transparency, and customise offerings for different customers.

    The Wealthtech industry refers to the finance companies that provide wealth management services to customers through the use of big data and analytics to improve investment decision-making. Wealthtech aims to develop digital platforms to pool and invest clients’ funds by automated investing algorithms. Take Robo-advisory services as an example—it is an automated online investing platform that uses algorithms to provide personalised investment advice, portfolio management functions, and other financial services. Also, the rise of social trading platforms like eToro allows individuals to follow and copy the investment strategies of successful traders, which enables them to achieve the same return as the trader they follow. Overall, Wealthtech makes wealth management more efficient, cost-effective, and customer-centric by using technology to streamline processes, increase transparency, and customise offerings for different customers.

    The blockchain and cryptocurrency industry in Malaysia refers to companies that provide platforms for cryptocurrencies trading and digital asset management. The cryptocurrency industry in Malaysia currently offers platforms for customers to trade and hold cryptocurrencies like Bitcoin, Ethereum, etc. Although blockchain technology has the potential to disrupt the finance industry, the risk of investing in cryptocurrency is high and uncertain, given the technology is still developing and just having less than a decade of history. Not only that, unlike the equity market, cryptocurrency has less regulatory governance, so investors should look out for the systematic risks of cryptocurrencies such as regulatory risk, programming risk, and market manipulation.

    The Islamic finance industry refers to companies that are backed by Islamic law and provide Shariah-compliance financial services to the Muslim population in Malaysia. The Islamic finance industry has its uniqueness in abiding by the Islamic principles. One of the principles, namely Riba (interest), prohibits the charging or paying of interest, while Maisir (speculation) prohibits investment in certain types of businesses, particularly those that are considered harmful to society or are in conflict with Islamic values; for example, sports betting businesses and alcoholic companies. The Islamic finance industry includes various financial institutions and products, such as Islamic banks, sukuk (Islamic bonds), Islamic insurance, and Islamic funds. The Islamic finance market in Malaysia is considered well-established and diverse, and it continues to grow, making it one of the leading Islamic finance markets in the world, hence attracting foreign investors who look to invest in the country via Islamic finance investment opportunities. 

    Regtech (regulatory technology) is the application of technology to the compliance and regulatory requirements of financial institutions. The Regtech industry helps companies to be more efficient and to effectively comply with the growing number of regulations they are subject to while also reducing the costs and risks associated with compliance. Regtech aims to help financial institutions comply with regulations in more automated and cost-effective ways while also reducing the risk of non-compliance and increasing transparency and security. However, Regtech is still growing at a slow pace. It is considered a niche market in Malaysia as local regulators are still currently relatively conservative about Regtech.

    Lastly, the crowdfunding industry provides a structural platform for connecting potential donors with entrepreneurs or organisations seeking funding. The business model of the crowdfunding industry operates as a middleman for connecting entrepreneurs to donors for funding their business or project. The platform charges a certain percentage of the management fees as operating income. Generally, crowdfunding platform fees vary from 5% to 12%. The crowdfunding business is an alternative way for businesses, projects, and entrepreneurs to access funding aside from conventional banks’ debt or equity financing. Crowdfunding tends to seek capital from individuals and hence has a relatively lower threshold of donation amount.

     

    How can we Malaysians benefit from digital finance? What are the potential cons to look for?

    A report from the World Bank stated that countries with deeper, more developed financial systems can actually achieve higher economic growth and faster reductions in poverty and income equality, especially among developing countries. 

    Digital technologies are making it possible to bring financial services to those who previously have lacked access (almost two-thirds of adults in the developing world). Adopting technology could lower costs by maximising economies of scale, increasing the speed, security, and transparency of transactions, and allowing for the development of sustainable financial products tailored to the needs of people with very low, erratic incomes. Digital finance is removing the barriers to financial services, including those arising from issues such as lack of identification, absence of formal income, and geographical distance.

    A high mobile phone usage rate was the key to achieving digital financial inclusion in many developing countries. Today, there are over 850 million registered mobile money accounts across 90 countries, with $1.3 billion transactions occurring through these accounts every day.  Sub-Saharan Africa has become a leader in mobile money, with over a fifth of the adult population having a mobile money account. This region has also shown that these accounts can provide a basis for more sophisticated financial services, such as digital lending and insurance. Large e-commerce platforms and telecom operators have leveraged the ability of digital finance to facilitate payments to offer services such as insurance and lending.

    One of the most significant benefits of developing digital finance is increased financial inclusion. Digital finance makes financial services more accessible to people who were previously unbanked or underbanked, such as those living in remote areas or those with low incomes. This results in greater economic opportunities and improved financial stability for these individuals. By providing access to basic financial services, digital finance can help people build a better future for themselves and their families.

    Other than that, the development of digital finance can improve the accessibility and convenience of the financial services industry. Digital finance eliminates the need for physical bank branches and ATMs, allowing people to access financial services from anywhere with an internet connection. With solid digital finance development as the backbone of the economy, transactions can be completed faster and with more ease, making it easier for people to manage their finances. Digital finance also enables financial institutions to lower transaction costs and serve massive customers at once, enabling better and quality services to deliver the best customer experience. 

    Another benefit of digital finance is enhanced security and fraud prevention. Digital finance is often more secure than traditional financial services, with multiple layers of security, including encryption and authentication processes. This can help prevent fraud and protect consumers’ financial information. In particular, digital finance platforms often use biometric authentication and multi-factor authentication, making it difficult for fraudsters to access people’s financial information. However, incautious user behaviours may bring about vulnerabilities through security breaches such as the installation of malware apps and viruses that leak users’ data.

    The COVID-19 pandemic has heightened the urgency of using digital financial services to keep financial systems functioning and people safe during time of social distancing, falling demand, reduced input supply, and tightening credit conditions. The development of digital finance can help governments quickly and securely reach people with cash transfers and other forms of financial assistance and reach businesses with emergency liquidity. It is allowing people to transfer funds, enable cross-border remittances, and pay bills from their homes with no physical contact.

    Overall, the development of digital finance has the potential to transform the financial industry and bring numerous benefits to consumers and businesses. This is also aligned with World Bank’s findings of digital financial services, which states that the development of digital finance can benefit people in accessing basic financial services such as transaction accounts, credit, savings products, and insurance. It is crucial as it can help the poor increase their incomes and become more resilient. Lastly, as technological advancement continues to evolve and expand, it is clear that digital finance will play a critical role in shaping the future of finance.

     

    Reference List:

    Top 10 differences between Internet Banking and Traditional Banking (no date) AccountLearning.com. Available at: https://accountlearning.com/top-10-differences-between-internet-banking-and-traditional-banking/ 

    Fintech News Malaysia (2022) Fintech Report 2022: Malaysia charts a new path for Fintech growth, Fintech News Malaysia. Available at: https://fintechnews.my/31945/malaysia/fintech-report-malaysia-2022/ 

    World Bank Group (2020) How countries can expand access to digital financial services, World Bank. World Bank Group. Available at: https://www.worldbank.org/en/topic/financialsector/publication/digital-financial-services (Accessed: March 4, 2023). 


    Written by:  Sylvia Chen Weng Yan, Alex Chong, Yeoh Jia Xin, Muhammad Hafizuddin Hakim Bin Ruzlisham and Sherilynn Ngerng Siew Fong

    Edited By: Abigail Phang

     

  • Everything you need to know about “Sustainable Finance”

    Everything you need to know about “Sustainable Finance”

    What is ‘sustainable finance’?

    Sustainable finance is any form of financial activities and processes in the financial sectors that takes Environment, Social and Governance (ESG) into consideration.

    • Environmental factors – Involves climate change mitigation and adaptation, the environment in general, such as biodiversity preservation, pollution avoidance, and the circular economy.
    • Social factors – Comprises issues of inequality, inclusion, labour relations, human rights problems, investment in human capital and communities.
    • Governance – Includes public and commercial organisations, including management structures, employee relations, and executive compensation, which plays a crucial role in ensuring that social and environmental factors are included in the decision-making process. 

     

    Impact investing

    This is a form of investment made in businesses or organisations that seeks to generate both financial returns and positive social or environmental impacts. Impact investors often focus on sectors such as renewable energy, affordable housing, and education. Impact investments are a type of responsible and sustainable investing, in addition to environmental, social, and governance (ESG) risks to operational or financial performance.

     

    Sustainable finance regulation

    Governments and regulatory bodies around the world are increasingly implementing policies and regulations to promote sustainable finance. These policies can include requirements for financial institutions to disclose their ESG practices and performance, as well as incentives to encourage investment in sustainable projects.

     

    What do the regulations entail? 

    Taxonomies, product standards, disclosures, and labelling; management and disclosure of climate risks; management and disclosure of ESG risks; ESG in stewardship, and green bond rules are the main subjects in sustainable finance regulation around the world. 

    All regions of the world view sustainable finance regulation as essential for boosting market openness and minimising the possibility of greenwashing. The nations of the European Union continue to dominate in terms of the depth and breadth of regulatory efforts. While Asia has accelerated their pace of new initiatives, North America and Australia have also substantially boosted regulatory activity. Additionally, the United Kingdom has the most extensive regulatory structure of any country outside the EU.

     

    Green regulatory landscape in Malaysia

    Several sustainable finance guidelines addressing environmental and social (E&S) concerns have been published and these include:

    Financial institutions are expected to handle climate-related risks in accordance with Bank Negara Malaysia’s Climate Risk Management and Scenario Analysis guidance (BNM) and Value-based Intermediation Financing and Investment Impact Framework (VBIAF) sector guides.

    Financial institutions in Malaysia are also obligated to disclose information in accordance with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), the Climate Change and Principle-based Taxonomy (CCPT). Management of this risk would need increased deforestation- and conversion-free commitments from financial institutions and enterprises, and also a categorization system (taxonomy) based on risk for sectors and assets susceptible to biodiversity degradation. This system would potentially assist in the reallocation of capital flows from biodiversity negative to positive initiatives.

    Additionally, the Joint Committee on Climate Change (JC3) is in the process of developing a data catalogue to map accessible climate data sources. This catalogue will aim to enhance disclosure and data accessibility for more openness and harmonisation, which in turn promotes improved decision-making and risk management.

    BNM’s participation in the Central Bank & Supervisors Network for Greening the Financial System (NGFS) and other worldwide platforms is a driving factor for the expansion of excellent regulatory and supervisory practices. Central banks and financial regulators however would need to expedite the full deployment of their monetary policy, regulatory, and prudential powers to enable a quick and orderly transition.

     

    What is ‘greenwashing’?

    Greenwashing is a complicated and broad phenomenon that may arise at any level of the financial chain, resulting in firms being able to create misleading sustainability statements about their operations and policies to make their goods becoming more environmentally attractive. It was initially started in the 1960s, when the hotel industry faced a reduction in their laundry expenses, as they demanded that guests reuse their towels to conserve the environment. Today, brands and products have gone through multiple greenwashing processes, as they are rebranded and repackaged as eco-friendly to persuade and promote consumers on the firm’s sustainability actions.

     

    How is Greenwashing relevant in today’s world?

    According to Diab (2022), although many corporate firms will readily commit to reducing their carbon emissions, they will not react now, and this puts future generations at risk. The government’s absence of regulation and monitoring is an advantage to firms in fulfilling their green objective by maximising their green brand image at the lowest possible financial and operational cost, unfortunately resulting in insignificant environmental effects on the Earth. Apart from maximising profit, firms tend to practise greenwashing to pursue a high trajectory of business growth and shareholder value maximisation, which is unfavourable for our environment.

    To illustrate, Chanel, known for its luxury fashion, has been keeping pace with the changing trends and doing its part in fighting climate change with its climate strategy, Chanel Mission 1.5° (Chanel, 2020). According to Rocha et al. (2022), Chanel borrowed €600 million from its investors by offering its sustainability-linked bonds (SLBs) with certain conditions in 2020. Its Chief Financial Officer sees SLBs as a perfect opportunity to integrate its finance strategy with its corporate strategy based on its sustainability ambitions. Investors were promised that if Chanel did not fulfil specific climate targets, extra returns had to be paid as a penalty for not meeting the targets.

     

    Consequences of Greenwashing

    Greenwashing is detrimental to both consumers and the environment. Consumers may be misled into purchasing environmentally unfriendly products that are advertised. This can lead to a waste of money as well as a loss of consumer trust in environmentally friendly products. Furthermore, by engaging in greenwashing, businesses may be able to avoid making necessary changes to their operations, which can have a negative impact on the environment. A company that claims to be environmentally responsible but continues to use hazardous chemicals in its products, for example, contributes to environmental degradation.

     

    Ways to identify Greenwashing

    Consumers must be able to recognise fraudulent or deceptive environmental claims in order to avoid being taken advantage of by greenwashing. There are several methods for detecting greenwashing, such as looking for vague or unsupported statements. A claim that a product is “eco-friendly,” for example, is ambiguous and impossible to verify, so it should be approached with caution. Another method to help avoid one from falling prey to greenwashing is to look for third-party certifications from organisations such as the Forest Stewardship Council or the Rainforest Alliance. Finally, readers of news stories or visitors to websites that track a company’s environmental performance can learn about its track record of success. Consumers can better educate themselves about which products are truly environmentally friendly and which are simply greenwashed by following these actions.

     

    SDGs behind prevention of Greenwashing

    Companies can meet at least a few of the Sustainable Development Goals (SDGs) by adopting the 6-Steps Approach that refers to the guidance from Ernst and Young Global (2017) provided in contributing and aligning their business towards the SDGs. The 6-Steps Approach are:

    1. Identify and commit
    2. Develop targets and KPIs
    3. Align sustainability and corporate strategy toward targets
    4. Create business opportunities
    5. Collaborate
    6. Measure, assess, document and communicate

    In order to contribute and meet the SDGs, the companies must first realise and identify which SDGs they can commit to through their businesses. The business opportunities and interests of a company can be linked to the existing SDGs and a company’s particular choice of SDGs could form a positive loop, creating a win-win situation for both sides. Companies can start taking a strategic approach and align their corporate priorities with the relevant SDGs. This practice allows them to explore all the opportunities and come up with plans to achieve the mutual goals between the companies and SDG 17.

    Second, companies can develop their targets and KPIs. They should set their own clear targets and key performance indicators (KPIs) to monitor and communicate progress towards SDGs from time to time. The companies should also adjust any existing corporate targets as well as monitoring and measurement methods to meet these new SDG targets and KPIs.

    The next step is to align the sustainability and corporate strategy of the companies toward SDGs. Companies need to reassess how well existing practices are in line with the issues and targets by adjusting the business models, products and services, supply chains, and sustainability strategies towards the SDGs. Also, companies who support the SDGs can start by reducing the link between economic growth and intense use of energy, water efficiency, and lower carbon emissions.

    Through proper alignment of strategies, these companies who set themselves on the path of SDGs are able to create and spot new business opportunities. This, in turn, helps the companies to grow themselves as they create more resilient and prosperous communities, enabling an expansion of their markets and a growth in consumer bases. 

    The fifth step is to collaborate; it is unlikely for a single company to solve any of these problems on its own, and collaboration, both within sectors and across different industries, is crucial to put the puzzle together. The companies can identify collaboration opportunities with the government, peers, customers, suppliers, academia and nonprofit organisations across various industries to achieve mutually beneficial solutions for all. 

    Lastly, the companies should closely measure, assess, document and communicate their actions and results to the public in order to play their part in achieving SDGs. Companies should develop a transparent system that integrates the management of SDGs’ issues into everyday business decision-making and report their accomplishments by issuing a sustainable report to communicate to the public.

    The measurement of a company’s commitment towards the SDGs is dependent on each company as they tend to evaluate themselves based on their own achievements. However, referring to independent organisations such as GRI (Global Reporting Initiative) by the UN will provide a holistic and transparent view of the companies’ progress in pushing the SDGs initiatives.

     

     

    Reference

    Bakken, R. (2021, August 9). What Is Sustainable Finance and Why Is It Important? Harvard Extension School. https://extension.harvard.edu/blog/what-is-sustainable-finance-and-why-is-it-important/

    Broom, D. (2022, January 20). What is sustainable finance & how it is changing the world. World Economic Forum. https://www.weforum.org/agenda/2022/01/what-is-sustainable-finance/

    Chanel. (2020, March). Chanel Mission 1.5°. https://www.chanel.com/my/climate-report/

    Chater, J., Kernoghan, H., & Sigauke, G. (2022, September 21). Greenwashing – a hinderance to sustainable finance. Penningtons Manches Cooper. https://www.penningtonslaw.com/news-publications/latest-news/2022/greenwashing-a-hinderance-to-sustainable-finance

    Diab, K. (2022, March 5). Why do corporations greenwash? Al Jazeera. https://www.aljazeera.com/opinions/2022/3/5/why-do-corporations-greenwash

    Ernst & Young Global. (2017, March 9). Why Sustainable Development Goals should be in your business plan. Ernst & Young. https://www.ey.com/en_my/assurance/why-sustainable-development-goals-should-be-in-your-business-plan

    GRI. (2022, January 17). Most companies align with SDGs – but more to do on assessing progress. Global Reporting Initiative. https://www.globalreporting.org/news/news-center/most-companies-align-with-sdgs-but-more-to-do-on-assessing-progress/

    Hayes, A. (2022, November 8). What Is Greenwashing? How It Works, Examples, and Statistics. Investopedia. https://www.investopedia.com/terms/g/greenwashing.asp

    NatWest. (2021, January 14). Sustainable finance a success story of change. https://www.natwest.com/corporates/insights/sustainability/sustainable-finance-a-success-story-of-change.html

    Rocha, P. A., Rathi, A., & Gillespie, T. (2022, October 4). Empty ESG Pledges Ensure Bonds Benefit Companies, Not the Planet. Bloomberg. https://www.bloomberg.com/news/features/2022-10-04/greenwashing-enters-a-22-trillion-debt-market-derailing-climate-goals?leadSource=uverify%20wall

    UNEP FI. (2017, June 6). The Evolution of Sustainable Finance –. United Nations Environment Programme – Finance Initiative. https://www.unepfi.org/news/timeline/

    World Business Council for Sustainable Development [WBCSD] & World Resources Institute [WRI]. (n.d.). A Corporate Accounting and Reporting Standard (Revised Edition). Greenhouse Gas Protocol. Retrieved December 15, 2022, from https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf

     


    Written By:  Sylvia Chen Weng Yan, Alex Chong, Yeoh Jia Xin, Muhammad Hafizuddin Hakim Bin Ruzlisham and Sherilynn Ngerng Siew Fong

    Edited By:  Julia Yazid

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