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Maybank IB's Sustainalytics scores of listed firms still positive

Publish date: Thu, 21 Sep 2023, 03:55 PM

KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) has observed that the overall bias remains broadly positive when reviewing the year-to-date (YTD) quarterly data for Sustainalytics scores concerning Malaysian stock coverage in 2023. 

However, the investment bank said the consumer, telcos and utilities sectors showed a somewhat mixed trend. 

It added that notable rating improvements were for CTOS Digital Bhd, where risk rating improved to medium from high, Sunway Bhd improved to a relatively rare negligible risk and AEON Co (M) Bhd went from medium to low. 

Separately, Maybank IB said YTL Power International Bhd remains the only coverage stock scoring below 50, which is under the severe risk category. 

According to Maybank IB, global sustainable net fund flows remained challenging over the first half of 2023 (1H23), declining 62 per cent against 1H22. 

The contraction was attributed to a difficult macro backdrop as well as continuing headwinds regarding anti-environmental, social, and governance (ESG) campaigns and backlash in the US (political) and European Union (greenwashing). 

However, helped by higher valuations, sustainable assets under management (AUM) rose to US$2.8 trillion as at end of second quarter of 2023 (2Q23).

Meanwhile, global green bond issuance is on track for a record year, with 1H23 debt issuance for environmentally friendly projects outpacing fossil fuels for the first time, 

"Domestically, the National Energy Transition Roadmap (NETR) is advancing a slew of clean energy initiatives, a crucial decarbonisation lever, while electric vehicle (EV) ambitions have been bolstered with investments from Tesla and Geely.  

"Per the latest thematic report from Maybank IB's Sustainability Research team, Asean is lagging, per EV car sales share of total vehicle sales at just 2.1 per cent versus 29 per cent in China, 21 per cent in Europe and a 14 per cent global average," it noted. 

Additionally, Maybank IB said overarching top-down "carrot and stick" policy initiatives are increasingly self-reinforcing and accelerating global bottom-up sustainability integration and decarbonisation. 

It added that subsidies and investments in the Inflation Reduction Act (IRA) 2022 are sparking a surge in climate-related projects in the US, including carbon capture and direct air capture, while pushing the European Union (EU) to keep up. 

At the same time, the EU's Carbon Border Adjustment Mechanism is prompting the US, UK and other countries to follow suit. 

"On regulators, International Organisation of Securities Commissions (IOSCO) last month gave their backing to the International Sustainability Standards Board's (ISSB) climate-reporting standards framework reestablishing global baseline," it noted.

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