Six ways BNM can drive Malaysia’s green investment

International think tank Positive Money has proposed six measures for Bank Negara Malaysia (BNM) to encourage greater investment in low-carbon projects as the central bank holds its JC3 Journey to Net Zero Conference 2026 in Kuala Lumpur.

Positive Money ranked BNM second in its 2025 East and Southeast Asia Green Central Banking Scorecard, which assessed how central banks and financial regulators across ASEAN+3 incorporate environmental considerations into their policies.

The think tank said BNM could strengthen its position by adjusting financial policies to make green investment more attractive.

Its proposals include relaxing reserve requirements for banks financing green projects and providing preferential lending rates for financial institutions investing in renewable energy and other low-carbon projects.

Positive Money also recommended incorporating environmental considerations into BNM’s collateral framework and reducing exposure to environmentally damaging assets in the central bank’s own investment portfolio.

The group called for greater coordination between BNM and the Securities Commission Malaysia on green investment classifications and sustainability-related risk reporting.

It also urged BNM to strengthen cooperation with other central banks and financial regulators on climate-related policies and financing.

Positive Money senior researcher Joe Herbert said central banks could play a significant role in directing financing toward the transition to a low-carbon economy.

“Central banks have a hugely important role to play in guiding finance away from high-carbon activities and towards green economic transition,” Herbert said.

“In our East and Southeast Asia Green Central Banking Scorecard, we found Malaysia to be a regional leader in green central banking, placing second amongst the ASEAN+3 countries,” he added.