The Government of Malaysia SDG Sukuk Framework Second-Party Opinion (2021)

Project Details

Project

Client

Government of Malaysia

Project Type

Sustainability Bond/Loan

Industry Group

Use of Proceeds

Location

Malaysia

Evaluation Date

Apr 2021

Evaluation Summary

Sustainalytics is of the opinion that the Government of Malaysia SDG Sukuk Framework is credible and impactful and aligns with the Sustainability Bond Guidelines 2018, Green Bond Principles 2018, and Social Bond Principles 2020, and ASEAN Sustainability Bond Standards 2018. This assessment is based on the following:

USE OF PROCEEDS

The eligible categories for the use of proceeds — Access to Essential Services: Healthcare, and Education, Affordable Basic Infrastructure, Employment Generation through Small and Medium Enterprises (SME), Clean Transportation, Sustainable Management of Living Natural Resources, Renewable Energy, and Green Buildings — are aligned with those recognized by the Green Bond Principles, the Social Bond Principles, and ASEAN Sustainability Bond Standards. Sustainalytics considers that the eligible categories are expected to facilitate the transition to a low-carbon economy and lead to positive social impacts in Malaysia, while advancing the UN Sustainable Development Goals (SDGs), specifically SDG 1, 3, 4, 6, 7, 8, 9, 11, and 15.

PROJECT EVALUATION/SELECTION

The Government of Malaysia has established the SDG Sukuk Technical Committee, which will be responsible for selecting projects in line with the Framework’s eligibility criteria. The Ministry of Finance will be responsible for reviewing and approving eligible expenditures. Sustainalytics considers the project selection process in line with market practice.

MANAGEMENT OF PROCEEDS

The Ministry of Finance will be responsible for the management of proceeds. Pending allocation, unallocated proceeds will be held in cash, cash equivalents or existing bond maturities. The Government of Malaysia intends to fully

allocate the net proceeds to eligible expenditures within the first year of issuance. Sustainalytics considers the management of proceeds process in line with market practice.

REPORTING

The Government of Malaysia intends to report on the allocation and impact of proceeds on its website, on an annual basis, until full allocation. Allocation reporting will include the summary of project details, amount of allocated proceeds, and balance of unallocated proceeds. In addition, the Government of Malaysia is committed to reporting on relevant impact metrics. Sustainalytics views the Government’s allocation and impact reporting as aligned with market practice.