Malaysia's Revised SRI Fund Guidelines: Overview Of The Key Changes

Sustainable and Responsible Investment ("SRI") also referred to as socially responsible investment or sustainable investing, represents an investment strategy that takes into account not only financial returns but also emphasizes positive environmental, social, and governance (ESG) outcomes.

In Malaysia, SRI has gained prominence in recent years, driven by the increasing awareness of sustainability issues and the desire to support responsible business practices.

The growing size of the SRI market in Malaysia is evident, with 70 SRI funds registered with the Securities Commission Malaysia ("SC") as of October 2, 2023. Among these, 29 are classified as Islamic funds.1

The SC recognizes the importance of promoting sustainable finance especially when it aligns closely with the core principles of the Islamic capital market. Further to this, the SC has introduced regulatory frameworks aiming to stimulate the growth of SRI funds in Malaysia.