Malaysia’s Climate Finance Innovation Lab has onboarded 30 climate-related projects with combined funding requirements exceeding RM4 billion as of January 2026, underscoring the growing demand for blended and innovative financing to support the country’s sustainability goals.

The initiative operates under the Joint Committee on Climate Change (JC3), led by Bank Negara Malaysia and the Securities Commission Malaysia, and is designed to accelerate the mobilisation of capital into climate mitigation and adaptation projects across the real economy.

Focus Shifts Toward Project Readiness and Partnerships

According to a joint statement from the two regulators, the lab has rolled out several mechanisms since its launch, including the Accelerator Programme and the Capital Solutioning Lab. These platforms are intended to help projects progress from concept to bankable investment opportunities.

Looking ahead, the Climate Finance Innovation Lab will place greater emphasis on strengthening project readiness and commercial viability, while also deepening collaboration between public, private, and philanthropic capital providers. Officials noted that this next phase is critical to ensuring projects can attract long-term financing rather than remaining dependent on pilot funding.

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Blended Finance Seen as Key to Unlocking High-Risk Projects

Madelena Mohamed, Assistant Governor at Bank Negara Malaysia and JC3 Co-Chair, said the lab highlights the importance of diverse capital providers working together to structure financing solutions for climate projects that may not yet meet conventional risk and return thresholds.

She emphasised that many climate initiatives essential to national sustainability targets carry higher perceived risks or longer payback periods, making collaboration between private investors, public institutions, and philanthropic capital necessary to close financing gaps.

Without such cooperation, she noted, strategically important climate projects are likely to remain underfunded despite their long-term economic and environmental value.

Taxonomy and Regional Frameworks to Guide Capital Allocation

Neetasha Rauf, Chief Sustainability Officer at the Securities Commission Malaysia and JC3 Co-Chair, said advancing financing for climate adaptation remains a central priority for regulators. She pointed to the forthcoming Malaysia Taxonomy as a critical tool to help guide capital toward credible and impactful climate activities.

Rauf also highlighted the relevance of guidance from the ASEAN Capital Markets Forum, particularly its Phase 1 White Paper on Mitigation Co-benefit and Adaptation for Resilience. The framework is intended to help market participants identify investable climate adaptation technologies and projects more consistently across the region.

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JC3 Sets Priorities for 2026 Climate Finance Agenda

The update followed the JC3’s 16th meeting, where members reviewed progress made during 2025 and set strategic priorities for the year ahead. The committee reaffirmed its focus on accelerating climate action within the real economy by improving access to finance and strengthening the broader sustainable finance ecosystem.

Building on momentum generated during Malaysia’s ASEAN Chairmanship, JC3 said it will continue to prioritise initiatives that support climate-aligned investment at scale. This includes advancing the Malaysia Taxonomy as a consistent national classification framework, with a public call for feedback on its design and scope expected to be issued by the end of February.

As climate finance demand continues to grow, regulators view the lab as a central platform for converting policy ambition into investable opportunities that can support Malaysia’s long-term transition objectives.

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