KUALA LUMPUR: Financial institutions have been urged to make a concerted effort to help micro-, small- and medium-sized enterprises (MSMEs) meet environmental, social and governance (ESG) requirements.
Finance minister Tengku Zafrul Aziz pointed out that ESG assets under management are now estimated to hit US$53 trillion (RM225 trillion) by 2025, a third of total assets under management globally.
Furthermore, ESG funds now account for roughly 10% of worldwide fund assets.
“As such, it is critical to ensure that MSMEs are not shut out of markets, or deprived of future financing due to non-compliance with ESG principles in their operations,” Tengku Zafrul said in his special address at the Credit Guarantee Corporation’s (CGC) 27th Financial Institution/Development Financial Institution and SME Awards.
“This is also why the government introduced measures such as the low carbon transition facility through BNM (Bank Negara Malaysia) in Budget 2022,” he said.
He pointed out that it is critical for banks and financial institutions to play an active role in facilitating the transition of MSMEs to low-carbon and sustainable practices.
“Your zero-carbon targets may be aggressive, in which case it is more important for you to guide the MSMEs in achieving their ESG targets,” he added.
The minister said government-linked investment companies (GLICs) and government-linked companies (GLCs) have embraced sustainability principles and this will cascade down to the MSMEs through the GLICs/GLCs’ respective ecosystems.
On the subject of financing, CGC revealed that from April 2020 to June 2022, it had issued a total of RM13.2 billion in guarantees for SMEs.
From the total, RM6.1 billion was for the special relief facility and target relief and recovery facility, while RM5.6 billion was for the portfolio guarantee/wholesale guarantee schemes.
Its chairman Mohammed Hussein said the agency is aware that it has to play a growth-oriented role as well as a counter-cyclical role to assist MSMEs during difficult times.
“The past two years have certainly been a difficult time for the MSMEs. While the green shoots of recovery have blossomed for some, many MSMEs are still struggling to rebuild and scale up their business, or even restart (those that had been forced to shut down),” he added.