Listed firms should lead SMEs to be part of green value chain: Bursa Malaysia CEO
Tan Ai Leng
Big corporations and publicly-listed companies should lead local small and medium-sized enterprises (SMEs) to be part of the green value chain, instead of cutting them off when they fail to meet targets, said Bursa Malaysia chief executive Muhamad Umar Swift.
Speaking at the Invest Malaysia conference on Wednesday (Nov 9), he noted that the cost and efforts in reducing carbon emission should not be seen as spending but investment during the transition period.
“There have been discussions that banks are not funding such projects (that promote decarbonisation). But as corporations, we ourselves should play a role in engaging and move them up in the journey,” he said. “This will differentiate your company and others in a highly competitive market. There’s an advantage of being an early adopter.”
In assisting companies to transit towards being carbon-zero, the Malaysia bourse is now on track to launch its Voluntary Carbon Market (VCM) by way of auction in December, said Swift. Bursa is currently in the midst of finalising the pricing and verification process.
With the rollout of the VCM, it will enable companies to buy carbon credits to offset their emissions. VCM will adopt the Verified Carbon Standard, also known as Verra, to ensure the integrity of the carbon credits.
In a separate speech at the event, Bursa Malaysia chairman Wahid Omar said that the VCM facilitates price discovery for new products by serving as a reference price for carbon credit trading, as well as generating tangible price signals for potential issuers to embark on domestic carbon credit projects.
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“A healthy ecosystem is crucial. Besides government and other project developers, financial institutions have a large role. Investments in the right projects are key to driving a sustainable supply of carbon credits and making it widely accessible,” he added.
Citing a report by McKinsey last year, Wahid said that the annual demand for carbon credits could reach up to 1.5 to 2 gigatons of carbon dioxide by 2030, and up to 7 to 13 gigatons of CO2 by 2050.
“Depending on different price scenarios and their underlying drivers, it could be worth between US$5 billion and US$30 billion at the low end, and more than US$50 billion at the high end.”
At the COP27 summit in Egypt earlier this week, International Monetary Fund (IMF) managing director Kristalina Georgieva said the price of carbon needs to average at least US$75 a ton globally by 2030 in order for global climate goals to succeed.
Leah Wieczorek-Bauer, the vice-president of global carbon origination and structuring at Macquarie, said most corporations in the voluntary market are buying offsets for carbon neutrality or net zero commitment. This is because current technologies may not allow them to decarbonise.
However, she noted that as carbon credits are just transition tools as technology evolves, these corporations will have to adopt new methods to decarbonise.
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