Climate-Related Disclosure in Malaysian Wakalah Sukuk

Abstract

It is evident that climate change, especially those related to Covid-19 has opened many new avenues of research and policy making initiatives. Climate-related disclosure is among them. While a number of policies have been drafted and finalized in both local and international markets, the practices to conform to the policies are only at the infant phase. Considering the initiatives taken by global policy makers and local regulators in relation to climate change, it is imperative to provide some insights on the responses of various financial players. For a beginning, this study has considered a number of sukuk issuers and their climate-related disclosures. Since these issuers’ principal activities involve various business activities, diversity of climate change and climate-related disclosures are anticipated. Using a document analysis on 13 selected Wakalah sukuk documents, it was found that there are four types of climate-related risk disclosure with six types of disclosure practices. Further analysis is based on the provisions of Climate Change and Principle based Taxonomy (CCPT) (2021) and recommendations of Task Force Climate related Financial Disclosure (TCFD), the climate-related disclosure was found to be minimal and inadequate. However, the findings of this study are only limited to small sample size. Nonetheless, the findings may provide some insights for the financial players in their efforts to provide a quality climate-related disclosure and practices in tandem with the initiatives of the local regulators and international policy makers.