We have a new briefing document on Forests & Finance policy assessment for 2022
Forests & Finance conducts annual policy assessments to evaluate the quality and robustness of financial institutions’ financing and investment policies against 35 environmental, social, and governance (ESG) criteria. A maximum score of 10 would indicate that a financial institution has adopted policies that effectively mitigate the risks related to financing, deforestation, and related ESG issues.
Sahabat Alam Malaysia (SAM), as part of the Forests & Finance coalition, has produced a briefing document discussing the key findings from the Forests & Finance Policy Assessment in 2022 concerning Malaysian Financial Institutions.
Overall, the findings show that Malaysia is a significant player in the funding of forest-risk commodity sectors. While Malaysia’s prominent role in financing these high-risk sectors is understandable given our current economic development model, it also means that Malaysian financial institutions’ adoption and implementation of robust ESG policies are crucial.
The findings show that 79% of the financial institutions assessed have not yet committed to or disclosed their policies on “Environment” and “Social” risks.
Malaysian financial institutions that have not yet publicly disclosed responsible financing and investing policies should be put under the spotlight. We also find that most financial institutions still lack disclosure and transparency in their policy commitments, let alone policy implementation.
With an increasing spotlight on the role of finance to drive the sustainability agenda in the name of ESG policy or sustainable finance both globally and in Malaysia, it is expected that the financed activities will come under more stringent scrutiny for their environmental and social impacts. The annual policy assessment enables NGOs, media, regulators, and other stakeholders to see how the different financial institutions are dealing with deforestation risks and the related ESG issues. It also provides an opportunity for financial institutions to compare themselves with their peers and international best practices.
Robust policies and due diligence processes by banks and investors are needed to turn the tide on the devastating social and environmental impacts endemic to the forest-risk commodity sectors.
The 35 criteria in the Forests & Finance Policy Assessment Methodology should serve as a guide for the financial sector to develop robust policy.
You can download the report here or click on the thumbnail image to save a copy.
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