Non Esg Complying Businesses May Face Difficulty Getting Loans

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Deputy investment, trade and industry minister Liew Chin Tong (second from left) says the trend of requiring businesses to adhere to ESG principles is a global phenomenon.KUALA LUMPUR: Businesses not adhering to environmental, social and governance (ESG) principles may encounter difficulties securing bank loans in the near future, says deputy investment, trade and industry minister Liew Chin Tong.
He said the trend of requiring businesses to adhere to ESG principles is not limited to a single region but rather constitutes a global phenomenon.
“The banks also have to comply with their customer’s customers and this global arrangement,” he told a press conference after the launching of the Industry Environmental, Social and Governance framework (iESG) today.
“It’s a situation where the more ESG adaptability that (one) can actually achieve, the easier one can get funding,” said Liew when responding to a question on whether banks are becoming more stringent with ESG financing.
On whether obtaining loans will become harder, Liew said it would depend on individual banks and the pace at which they transition towards ESG-centric lending practices.
“For example, some global banks that have branches in Malaysia will push even faster because they have a global commitment,” he added.
Liew said the iESG framework aims to also assist micro, small and medium enterprises (MSMEs) in adapting to the changing financial landscape by helping them meet ESG standards.
The framework is aimed at bringing Malaysia closer to its sustainability and net-zero aspirations within seven years or less.
The iESG framework begins with Phase 1 from 2024 to 2026, followed by Phase 2 from 2027 to 2030.
During the first phase, manufacturing companies, including MSMEs, will be supported in starting their ESG journey through the self-readiness assessment, outreach, training or mentoring programmes, and financing options. - FMT

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