Green Financing: How Banks Drive Sustainability in Malaysia

Sustainability, No Longer Optional

In Malaysia’s evolving 2025 economy, sustainability isn’t just optional, it’s the new standard for competitiveness. The nation’s banking sector is steering this shift through green financing, a system that rewards businesses for investing in cleaner, smarter, and more efficient operations.

From Penang’s rooftop solar arrays to Sabah’s renewable power plants, sustainable finance is fuelling innovation across industries. BNM’s Value-based Intermediation (VBIAF) policies and the National Energy Transition Roadmap (NETR) have accelerated banks’ sustainable-finance offerings and risk practices across the system. (Source: Bank Negara Malaysia – VBIAF; Ministry of Economy – NETR)

For Malaysian business owners, this trend represents more than a policy change. It’s a gateway to growth, lower financing costs, and future-proof credibility.

What Is Green Financing?

Green financing involves the flow of funds (through loans, bonds, or investments) toward projects that deliver measurable environmental benefits, such as:

• Renewable energy installations (solar, hydro)
• Energy-efficient manufacturing and retrofits
• Sustainable agriculture and aquaculture
• Waste-to-energy and circular-economy initiatives
• Electric vehicle (EV) and low-carbon transport adoption

Green financing instruments:

• Green Loans & Bonds: Capital reserved for climate-positive projects.
• Sustainability-Linked Loans (SLLs): Pricing varies with ESG performance.
• Green Sukuk / Islamic Financing: Shariah-compliant structures funding environmental/social outcomes.
• Carbon-Market Access: Firms may purchase/retire verified credits via BCX; direct embedding into loan terms is emerging. (Source: Bursa Malaysia – Bursa Carbon Exchange)

Why Green Financing Matters in Malaysia

Malaysia’s commitment to achieve net-zero by 2050 puts finance at the heart of the transition. Four forces drive its importance:

Policy Alignment

• Under Value-Based Intermediation (VBI/VBIAF), banks integrate impact and sustainability into risk and credit processes. (Source: Bank Negara Malaysia – VBIAF)
• The National Energy Transition Roadmap (NETR) positions finance as an enabler of renewable growth and industrial decarbonisation. (Source: Ministry of Economy – NETR)

Access to Cheaper Capital

• Major banks (Maybank, CIMB, RHB) offer preferential terms for qualifying green and transition projects. (Source: Maybank – Transition Finance Framework; CIMB Sustainability Report; RHB Sustainability/SME Green Financing)
• The Green Technology Financing Scheme (GTFS 4.0) provides government guarantees (typically 60% and up to 80% for the waste sector) and interest/profit subsidies ~1.5–2% p.a., subject to category and scheme terms. (Source: MGTC – GTFS Overview & FAQ)

Export Competitiveness

• ESG-compliant firms meet buyer standards and retain access to global supply chains.

Market Credibility

• Sustainable companies enjoy better consumer trust and investor confidence.
• Disclosure expectations continue to rise under Bursa Malaysia’s enhanced sustainability reporting (IFRS S1/S2 aligned) while the SC’s SRI Taxonomy provides classification guidance. (Source: Bursa Malaysia – Sustainability Reporting Guide; Securities Commission Malaysia – SRI Taxonomy)

Read More: Why Businesses Need To Support Malaysian Sustainability

Key Aspects of Green Financing in Malaysia

How Malaysian Banks Are Leading the Sustainability Drive

Maybank: RM80 Billion Sustainable Financing Goal

Maybank pledged to mobilise RM80b by 2025 and published a Transition Finance Framework to support hard-to-abate sectors. (Source: Maybank – Sustainability/Transition Finance Framework)

CIMB Group: Scaling ESG-Linked Finance

CIMB integrates ESG into lending and targets net-zero by 2050. In 2024, it mobilised ~RM6.5b through sustainability-linked financing and treasury products; cumulatively it surpassed RM100b mobilisation by end-2024. (Source: CIMB Sustainability Report/Annual Report)

RHB Bank: Empowering SMEs to Go Green

RHB’s Green/Sustainable Financing suites offer preferential terms; 2025 updates highlight continued rollout for SMEs and corporates, including advisory and partnerships. (Source: RHB Sustainability/SME Green Financing materials)

Public Bank: Expanding Solar & Renewable Adoption

Public Islamic Bank promotes solar adoption via Solar BAE Term Financing-i for homes and businesses, alongside sustainability initiatives, without asserting a formal SEDA partnership. (Source: Public Islamic Bank – Solar BAE; Public Bank sustainability updates)

Read More: 10 CSR Program Ideas Every Malaysian Company Should Consider

PNB’s Sustainability-Linked Islamic Financing (SLF): A Malaysian Milestone

On Oct 16, 2025, Permodalan Nasional Berhad (PNB) unveiled its inaugural Sustainability-Linked Islamic Financing (SLF) facilities with OCBC Malaysia as sole sustainability structuring adviser.

Key Features of the PNB SLF:

• Profit rates are linked to SPIs/KPIs under PNB’s framework.
• Facilities are structured in dual currencies (MYR & USD).
• PNB’s 2030 aims include RM10b in Green & Transition Assets and 30% lower investment emission intensity.

Why it matters: It bridges Islamic principles with KPI-linked accountability and provides a replicable model for institutional lenders in Shariah-compliant markets. (Source: PNB media release)

How Green Financing Applies to Malaysian Business Owners

Cut your utility bills

• Install solar PV, high-efficiency lighting/chillers, or lower-energy equipment.
• Banks often reward upgrades with better rates or longer tenors.
• Payback depends on your load, tariff, and NEM setup. 

(Source: SEDA – NEM guidance; public sustainable energy case references)

Unlock cheaper financing & tax perks

• Use GTFS 4.0: government guarantee typically 60% (up to 80% for some sectors) + ~1.5–2% p.a. interest/profit subsidy.
• Claim GITA/GITE to offset eligible green capex.
• Many banks provide simplified ESG checklists to speed up approvals.

(Source: MGTC – GTFS; MIDA – GITA/GITE; bank SME ESG toolkits)

Stay in global supply chains

• Meeting ESG criteria helps you keep/export to multinational buyers.
• Leverage JC3/BNM Greening Value Chain support to build capacity.
  (Source: Bank Negara Malaysia/JC3 – Greening Value Chain programme)
• Attract investors & boost credibility
• Use SLL/SLF/green loans with clear KPIs to show measurable impact.
• Transparent metrics appeal to institutional and retail investors.

Prepare for tighter rules

Bursa Malaysia is raising the bar on sustainability disclosures (IFRS-aligned). SC’s SRI Taxonomy helps classify activities for consistent reporting. (Source: Bursa Malaysia – Sustainability Reporting Guide; Securities Commission Malaysia – SRI Taxonomy)

Get hands-on help and tools

Programmes like CIMB GreenBizReady plus SME Corp and MGTC offer training, playbooks, and calculators (e.g., MSME ESG Assessment, ESG Simplified Playbook).

Build a stronger team & brand

Public, consistent sustainability performance improves employee retention and community trust. (Source: Bank sustainability frameworks and industry practice)

Examples of Green Financing in Action

Solar PV Financing for SMEs

Through GTFS, SMEs install rooftop PV under flexible models. Typical bill savings are ~10–30%, depending on load profile, tariff, and NEM configuration. (Source: SEDA/NEM guidance; Malaysian solar case studies)

Malaysia’s Leadership in Green Sukuk

By number of issues, Malaysia accounted for the majority of global green sukuk as of July 2024 (262 of 291 globally). (Source: Bank Negara Malaysia – Deputy Governor remarks, July 2024)

Carbon Credits via Bursa Carbon Exchange (BCX)

BCX enables firms to procure and retire verified credits (including local auctions and REC trading), which can complement broader sustainability strategies. (Source: Bursa Malaysia – Bursa Carbon Exchange)

Sustainable Property Development

Developers increasingly rely on green/SL financing to fund low-carbon design and materials (bank frameworks under VBIAF guide risk evaluation). (Source: Bank Negara Malaysia – VBIAF sectoral guides)

SME Greening Value Chain Programme

BNM/JC3’s GVC pilot has supported hundreds of SMEs with training and access pathways to financing. (Source: BNM/JC3 – Greening Value Chain updates)

The Broader Impact on Malaysia’s Financial Ecosystem

Green finance is transforming capital flows, building up Malaysia as a regional hub for sustainable and Islamic finance:

• Strategic Integration: ESG is part of credit and risk evaluation (VBIAF). (Source: Bank Negara Malaysia – VBIAF)
• Digital Tracking: Banks use ESG data platforms to verify impact/KPIs.
• Investor Appeal: Global funds are increasing exposure to Malaysian sustainable assets (supported by policy clarity and market infrastructure).
• Inclusive Growth: Micro-enterprises and rural cooperatives gain access to RE microloans and community-based models via targeted schemes.

Financing the Future of Sustainable Business

Green financing represents a powerful partnership between Malaysia’s banks and its entrepreneurs. It rewards responsible behaviour with lower borrowing costs, broader market access, and long-term resilience.

Institutions like Maybank, CIMB, RHB, Public Bank, and PNB show how aligning capital with climate goals can drive innovation rather than restrict it. As Malaysia advances toward its 2050 net-zero target, green financing won’t just support growth; it will define it. (Source: Ministry of Economy – NETR)

If you’re a business owner concerned about the environment, but you struggle to make sense of all these initiatives and regulations, then seek out Press PR Agency today. Press can help you make sense of it all, and help boost your business performance at the same time.