Sustainability and Responsible Investment
This domain tests how sustainability and responsible investment are regulated in the Malaysian capital market: SRI fund labelling, taxonomy, listed-issuer reporting and greenwashing risk.
Core rules
- The SC's Guidelines on Sustainable and Responsible Investment Funds govern SRI fund labelling, disclosure and periodic reporting.
- The SC's Principles-Based SRI Taxonomy provides a common classification for sustainable activities and supports credibility of labelled products.
- Bursa Listing Requirements require sustainability reporting by listed issuers, aligned with the Bursa Sustainability Reporting Guide.
- Malaysia is moving towards ISSB-aligned reporting through the National Sustainability Reporting Framework, with phased adoption of IFRS S1 and S2.
- Stewardship and engagement are part of responsible investment; voting and engagement records should support the fund's stated strategy.
- Greenwashing is a conduct risk: marketing claims must be supported by evidence and consistent with the fund's mandate.
Worked example
A fund markets itself as a green fund but holds significant coal exposure. The label and marketing may be misleading unless the fund's disclosed strategy permits transition assets and the exposure is clearly explained. The fund should align its holdings and disclosure with its stated SRI strategy or change the label.
Traps
Assuming sustainability reporting is voluntary for listed issuers; equating an ESG rating with regulatory compliance; ignoring the taxonomy when labelling a fund; making unsubstantiated green claims.