IFC and Cagamas Partner to Accelerate Green Building Finance in Malaysia, Advancing Climate and Inclusivity Goals

This strategic partnership aims to enhance green building finance, facilitate inclusive housing solutions, and support Malaysia’s long-term goal of achieving net-zero emissions by 2050.

In a significant step toward advancing sustainable development and climate-smart investments in Malaysia, the International Finance Corporation (IFC), the largest global development institution focused on the private sector in emerging markets and a member of the World Bank Group, has signed a memorandum of understanding (MoU) with Cagamas Berhad (Cagamas), Malaysia’s National Mortgage Corporation. This strategic partnership aims to enhance green building finance, facilitate inclusive housing solutions, and support Malaysia’s long-term goal of achieving net-zero emissions by 2050.

The collaboration is expected to stimulate financing for green and energy-efficient housing by promoting the development of innovative green finance instruments, including green bonds, sustainable credit lines, and financing mechanisms for energy-efficient technologies such as sustainable cooling systems. By increasing access to financing for green buildings, the initiative will support Malaysia’s broader environmental and social agenda while also addressing challenges in the affordable housing sector.

Boosting Green Finance and Sustainable Housing

With the growing urgency to transition to a low-carbon economy, the IFC-Cagamas partnership is poised to enhance the capacity of Malaysian financial institutions to develop and issue green financial products aligned with Malaysia’s climate goals. This includes strengthening expertise in structuring green finance products, managing environmental, social, and governance (ESG) risks, and building pipelines of bankable projects in the green housing sector.

“Expanding the market for green building finance is essential for Malaysia to meet its net-zero commitments while ensuring financial institutions play a pivotal role in the transition to a sustainable economy,” said Judith Green, Country Manager for the World Bank Group in Malaysia. “This collaboration will facilitate knowledge-sharing and capacity-building for the banking sector, helping financial institutions integrate climate-smart investment strategies into their portfolios.”

Bridging the Affordability Gap for Green Housing

A key priority of the collaboration is to make green housing more affordable and accessible, particularly for lower-income households and women. By fostering the development of green mortgage products, the partnership seeks to address financial barriers that currently prevent broader adoption of sustainable housing solutions.

“Cagamas is committed to driving sustainable development by supporting innovative and affordable housing solutions,” said Kameel Abdul Halim, President and Chief Executive Officer of Cagamas. “Through this partnership with IFC, we aim to enhance financial inclusion and expand access to green mortgage options, enabling more Malaysians to benefit from energy-efficient and climate-resilient homes.”

The affordability of green housing remains a key concern, as initial costs associated with energy-efficient construction and retrofitting often deter prospective homeowners and developers. Through this collaboration, Cagamas and IFC will explore innovative financing models that reduce upfront costs, thereby incentivizing greater adoption of green housing solutions.

Strengthening Institutional Capacities and Policy Dialogues

Beyond financing mechanisms, the collaboration will also focus on strengthening institutional capacities within the Malaysian financial sector. IFC and Cagamas will provide technical assistance, training, and advisory services to financial institutions, ensuring that they are well-equipped to assess and manage risks associated with green building investments.

Additionally, the initiative aims to facilitate policy dialogues between the public and private sectors to address regulatory and financial barriers hindering the development of sustainable housing. By promoting cross-sector collaboration, the initiative will contribute to an enabling policy environment that supports Malaysia’s climate commitments under the Paris Agreement.

### **Unlocking Market Opportunities in the Green Building Sector**

Malaysia’s green building market presents vast untapped potential. According to industry estimates, the transition to sustainable building practices could unlock billions in economic opportunities, including job creation, investment in green technologies, and increased efficiency in resource utilization.

By leveraging the expertise of IFC, which has extensive experience in financing sustainable infrastructure worldwide, and the financial leadership of Cagamas, the initiative aims to create a robust ecosystem for green building investments in Malaysia. This collaboration represents IFC’s first engagement in Malaysia’s green building sector, marking a significant milestone in its broader efforts to support the country’s sustainable economic transformation.

“Malaysia’s transition to a green economy requires a collective effort across various sectors,” said Green. “This partnership with Cagamas represents a step forward in mobilizing private sector investment for green and inclusive housing solutions.”

The Road Ahead

The IFC-Cagamas partnership is expected to roll out a series of initiatives over the coming months, including capacity-building programs, pilot projects, and stakeholder engagements. These efforts will focus on accelerating Malaysia’s transition to a greener, more inclusive housing market that aligns with both national and global sustainability objectives.

With Malaysia setting its sights on achieving net-zero emissions by 2050, fostering the growth of green building finance is more crucial than ever. This partnership is a testament to the country’s commitment to sustainability, inclusivity, and economic resilience, ensuring that climate-smart housing becomes a viable and accessible option for all Malaysians.