Shariah-compliant Finance Meets Green Technology: Malaysian Green Technology and Ficus Capital Break New Ground
KUALA LUMPUR, EMBARGOED UNTIL 6 October 2023 – Ficus Capital and the Malaysian Green Technology and Climate Change Corporation (MGTC) collaborated to pioneer the first-ever Shariah-compliant Greentech Fund in the world, signaling a significant advancement in sustainable and ethical investment opportunities. The groundbreaking announcement took place during the International Greentech & Eco Products Exhibition & Conference Malaysia (IGEM 2023), held at the Kuala Lumpur Convention Centre and inaugurated by YB Dato’ Sri Huang Tiong, the Deputy Minister of NRECC.
The primary objective of the Greentech Fund is to channel investments into green technology projects and enterprises that contribute to Malaysia’s ambition of achieving net-zero greenhouse gas emissions as early as 2050. The setup adheres to Securities Commission rules for Sustainable and Responsible Investment, which mandate that the fund incorporate sustainability considerations such as the Sustainable Development Goals (SDGs) or United Nations Global Impact (UNGC) Principles.
The Greentech Fund is dedicated to promoting green growth in which investors will actively participate in GHG emissions reduction and avoidance as well as carbon offset schemes and reap financial rewards. This demonstrates how closely the fund adheres to ESG guidelines and highlights its potential to investors looking for financial gain and environmental impact.
The investments are expected to reduce or avoid more than 9 million tons of greenhouse gas emissions through projects across various green industry sectors, such as Renewable Energy, Biofuel and Biomass Conversion, Waste Management and Biogas, Sustainable Agriculture and Forestry, Sustainable Transportation, and other environmental projects which complement several SDG pillars.
Investing in green projects and companies harmonises perfectly with our ‘Madani Economy: Empowering the People’ framework, aiming to enhance lives and reshape our economic landscape.” said Ts Shamsul Bahar Mohd Nor, Group Chief Executive Officer of MGTC.
Over the past 25 years, MGTC has led Malaysia’s green industry, bringing in substantial green investments worth over RM50 billion, that have reduced 16.4 million metric tonnes of GHG emissions and creating over 23,000 green jobs. Initiatives such as the Green Technology Financing Scheme (GTFS), MyHIJAU Mark, and Green Tax Incentives have catalysed positive change in the green economy sector.
GTFS has played a pivotal role in propelling green technology development in Malaysia by providing essential financial backing. Yet, throughout its implementation since 2010, there is a notable financing gap of RM14.5 billion. The demand for green capital and green financing outweighs the supply. Greentech Fund can complement these efforts by providing equity-based financing to green companies and green projects. This approach can encourage innovation, entrepreneurship, and the growth of sustainable businesses in Malaysia, thereby expanding the landscape of sustainable funding options for green companies.
“A tactical approach to address these financial gaps is establishing the Greentech Fund. This will support innovation, encourage entrepreneurship, and propel the expansion of sustainable enterprises in Malaysia by providing equity-based funding to green projects and businesses. It significantly expands the sustainable finance choices accessible to eco-friendly projects and businesses. This aligns with our goal of decreasing carbon emissions, contributing RM100 billion in green investment, and creating 230,000 green jobs by 2030.” Ts. Shamsul Bahar added.
Ficus Capital recognises the vast potential within green investments, particularly in Southeast Asia, primarily focusing on Malaysia. “Our fund is strategically designed to offer attractive returns to investors while aligning with their growing interest in climate change mitigation opportunities. Partnership with MGTC is pivotal in advancing the growth of projects and companies in Malaysia while reinforcing our dedication to fostering sustainability and contributing to the nation’s green aspirations,” said Abdullah Hidayat, Co-Managing Partner of Ficus Capital.
Unlike conventional financing, this fund adheres to Shariah principles, ensuring fair and transparent contracts for its fund’s projects and companies. Fair in this context means that the fund will not impose any interest charges in its investment agreements, and transparency shows that contracts are based on market prices and risk-sharing arrangements.
The fund is fully aligned with ESG principles, making it a champion of responsible investing. The fund focuses on the Quadruple Bottom Line, encompassing People, Planet, Profit, and Principle. This framework is an integral part of the larger ESG-Islamic framework embraced by the fund, highlighting its dedication to holistic sustainability.