Sustainable finance through ESG implementation in the Malaysian financial sector

Sustainable finance is the term that is used to describe the financial activities that provide support for sustainable development objectives, with a particular emphasis on environmental conservation (E), social equity (S), and also good governance (G). In prior research, ESG integration has been demonstrated to benefit corporate reputation, risk management, and financial performance (Friede et al., 2015). In recent years, sustainable finance has emerged as a critical component of the global financial sector, including Malaysia. The promotion of long-term economic sustainability and resilience necessitates the integration of Environmental, Social, and Governance (ESG) criteria into investment decisions and banking practices. The financial sector in Malaysia has gradually adopted ESG principles, which are consistent with the global trend towards sustainability. The integration of ESG factors into the operations of local commercial institutions in Malaysia is crucial for the advancement of sustainable development (Bank Negara Malaysia, 2019). Bank Negara Malaysia (BNM) has implemented local regulatory frameworks that have been instrumental in the advancement of sustainable finance.