Banks, financial institutions urged to guide MSMEs to embrace ESG principles
KUALA LUMPUR: Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz urged Credit Guarantee Corporation Malaysia Bhd (CGC), banks and financial institutions (FI) to look for ways to strengthen the micro, small and medium enterprises (MSMEs), especially in embracing the environmental, social and corporate governance (ESG) principles.
He said the ESG assets are estimated to hit US$53 trillion (US$1=RM4.44) by 2025, a third of global assets under management, while ESG funds now account for roughly 10 per cent 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,” he said in his speech at CGC's 27th FI/Development FI and SME Awards 2021 here, today.
He said a strong MSME sector would reflect on a stronger economy and its resiliency.
A concerted effort must be made to improve MSMEs’ knowledge, digital capabilities and collaborations with the innovator community - multinational corporations and academia - to help them build better offerings, he said.
It is also critical for the banks and FIs 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 and perhaps handhold the MSMEs in achieving their ESG targets,” he said.
The Minister said the government-linked companies and government-linked investment companies have also embraced the sustainability principle, which is extremely important as the objective is to have such principles cascade down to the MSMEs.
He added that Budget 2023 would also prioritise the initiatives to make MSMEs more competitive and resilient as well as other similar efforts to rebuild the sector's capabilities and boost their competitiveness.
MSMEs contributed 37.4 per cent of Malaysia’s gross domestic product and employed 47.8 per cent of the workforce in 2021.
"Given the MSMEs’ significant contribution to the country’s economy and job opportunities, clearly this is a sector that we must actively promote,” he said.
Also present at the awards ceremony were CGC chairman Datuk Mohammed Hussein and president/chief executive officer Datuk Mohd Zamree Mohd Ishak. - Bernama: