Page 74 - CMP3

Diagram 11
BROADER FUNDING OPTIONS NEEDED TO FINANCE GREEN AND TRANSITION SOLUTIONS TOWARDS A NET-ZERO FUTURE
Development
Construction
Spin-out of Commission operating assets
Infrastructure debt funds Asset-backed securitisation/bonds
Bank
Insurance companies
Pension funds/mutual funds/ hedge funds
Hedge funds
REITs
Development PE
VC
Source: Adapted from How to Finance Industry’s Net-Zero Transition, Oliver Wyman, 2021.
Infrastructure PE
B. GREATER DISCLOSURES AND DATA AS GAME CHANGERS TO CAPITAL MOBILISATION
As climate risk becomes a significant consideration of investment risk, investors look to company disclosures and data to make informed decisions. This will become more pertinent as transition finance grows increasingly more mainstream. Disclosures of data are thus key indicators for investors to identify potential risks such as potentially stranded assets and to evaluate if a company intends to manage its carbon footprint going forward. Such disclosures can provide holistic information for investors to analyse the risk-reward trade-off of carbon projects initiated by businesses and the cost of capital. This can also encourage greater participation from a broader set of investors, unlocking more capital for businesses that are sustainable and responsible. Nonetheless, the availability and comparability of climate disclosures across companies today remain key challenges in many jurisdictions, against the backdrop of multiple reporting standards and frameworks.
In response to this, an approach to promote greater alignment towards the recommendations of the TCFD for climate disclosure will be explored for both corporations and capital market intermediaries in Malaysia. This is in line with actions taken by regulators in other jurisdictions. Some jurisdictions have committed to making TCFD-aligned disclosures mandatory by 2025, while others have adopted a ‘comply-or-explain’ approach for climate disclosures, requiring companies to either provide TCFD-aligned disclosures or explain why they failed to do so.
72 SECURITIES COMMISSION MALAYSIA