First let us define both sustainable investing and impact investing. According to the CFA Institute, sustainable investing balances traditional investing with ESG insights to improve long-term outcomes. Meanwhile, the United Nations Development Programme (UNDP) defines impact investing as the deployment of funds into investments that generate a measurable and beneficial social or environmental impact alongside a financial return on investment (ROI).
 
So while sustainable investing does take into account ESG considerations, impact investing takes it one step further by setting quantifiable social and environmental ROI. Globally, US$2.3 trillion of assets have an intent for impact, of which US$636 billion of these assets clearly have impact management and measurement processes in place. The International Finance Corporation (IFC) believes the need to achieve the 17 United Nations Sustainable Development Goals (UN SDGs) will require US$5-7 trillion in financing yearly. In 2022, Southeast Asia alone saw US$5.2 billion of green investments.
 
Malaysia’s leadership role in this space is two-fold: first, Malaysia leads the ASEAN-6 in the highest commitment to emission reductions (45% by 2030); and second, Malaysia’s global leadership in the Islamic bond or sukuk space has made it a pioneer for green or climate sukuk, having launched the world’s first green sukuk as far back as 2017.

This has been reflected in the financial ROI as well: public listed companies in Malaysia with ESG investments have been trading at higher valuation multiples, supported by higher shareholder returns and profitability. Companies in FTSE4Good Bursa Malaysia (F4GBM) Index have 1.7x higher price-to-book value, 16.6% average RoE (non-F4GBM companies: 9.5%), and 14.4% average net profit margin (non-F4GBM companies: 8.4%).
 
InvestKL, through its ESG & Sustainability ConneXion Centre (ESGS CXC), aims to advance sustainable businesses in Malaysia by creating new possibilities in community engagement, policy advocacy, and build leading capabilities by sharing industry knowledge in sustainability. Recognising Greater KL as a fertile ground for impact investing, InvestKL Cares bridges MNC investors and the dedicated local NGOs and community leaders in Greater KL, forging partnerships that drive meaningful and lasting change within the society. Dutch social fintech startup uPledge exemplifies this potential by using Greater KL as a hub to expand opportunities for impact startups through its Islamic-based crowdfunding platform. The company aims to revolutionise the industry by assisting investors in improving their financial wellness and creating a lasting impact through sustainable investing. With subsidiaries in Malaysia and Kenya, uPledge uses artificial intelligence to screen and filter sustainable startups and organisations, connecting them with investors through a single app. This approach not only supports community development but also encourages companies to start and grow their impact investment initiatives, fostering a more sustainable and equitable future.