KUALA LUMPUR: Securities Commission (SC) is set to launch the sustainable and responsible investment (SRI) framework for investment funds by year-end to strengthen Malaysia’s position as the world’s Islamic banking hub.
SC development and Islamic markets managing director Zainal Izlan Zainal Abidin said the framework, would be based on Islamic values, as both SRI and Islamic finance have similar principles.
“We’re set to launch the SRI framework for investment funds by the end of the year. We’re in the midst of finalising it,” he said.
“It complements the SRI sukuk framework introduced back in 2014. It’s a new growth driver for the Islamic capital market,” he added.
He was speaking with reporters on the sidelines of the ‘Responsible Investment Forum’, jointly organised by the SC and Bursa Malaysia Bhd here today.
Zainal explained that this initiative would enable fund managers to offer products that combined SRI elements and were Syariah-compliant, he said.
Back in 2014, when Bursa Malaysia introduced the FTSE4Good index, there were 24 companies incorporating environmental, social and governance principles in their daily business. Today, it has almost doubled to 43.
The FTSE4Good index measures the performance of public-listed companies demonstrating strong environmental, social and governance practices in their daily operations.
Globally, SRI assets have gained prominence as it had increased 25 per cent to US$22.9 trillion between 2014 and 2016.
Although this initiative is relatively new here, Zainal highlighted Malaysia is the largest SRI market in this region.
“In Malaysia, Syariah-compliant assets under management accounted for 30 per cent of the Asian SRI market,” he said.
Earlier this year, Zainal said the SC had launched the Islamic fund and wealth blueprint which outlined strategies to create more products and services that meets both SRI and Islamic finance requirements.