SUMMARY
Sustainability is fast becoming mainstream for businesses and civil society alike. In Malaysia, Environmental, Social, and Governance (ESG) initiatives are supported by a mix of international grant funds, domestic financing mechanisms, and market-based instruments such as carbon trading. However, accessing United Nations (UN) grants and similar international funds isn’t straightforward for private companies. Instead, non-profit organizations (NPOs) and partners must act as intermediaries in grant applications, while companies bring technical expertise as project implementers.
This article outlines:
Key UN-linked ESG funding sources and grant amounts,
Why companies cannot directly apply for UN grants,
Malaysia’s regulatory and carbon market landscape,
Practical steps for collaboration,
Misconceptions, fraud risks, and safeguards
1. UNDERSTANDING ESG FUNDING : UN GRANTS AND MALAYSIA SDG TRUST FUND
One of the most notable mechanisms in Malaysia is the Malaysia-UN SDG Trust Fund, jointly administered by the UN and the Yayasan MySDG (supported by the Ministry of Finance Malaysia )
Grant Amounts and Scope
Total funding pool: ~USD 3.6–4.0 million per call (approx MYR 15–17 million),
Individual project grants: Range from USD 100,000 to USD 500,000 per project.
Project duration: Typically 6–18 months.
Projects include healthcare access, water and sanitation initiatives, sustainable agriculture, and community empowerment programs.
Additional funding may be available via UNDP capacity building grants, supporting social enterprises and MSMEs (~USD 6,750 per entity), although these are smaller in scale.
2. WHY PRIVATE COMPANIES CANNOT DIRECTLY APPLY FOR UN GRANTS
UN and multi-partner trust funds are designed to support public benefit outcomes, not direct corporate profit:
Eligibility: Only NPOs (Non-Profit Organization), NGOs (Non-Governmental Organization), academic institutions, or UN agencies can apply as lead entities,
Purpose alignment: Projects must demonstrate measurable SDG impact,
Implementation structure: NPOs act as lead applicants and fiduciaries, while private companies serve as technical partners under contract.
Implication for Malaysian companies: Collaboration with an experienced NPO is mandatory to access UN-linked ESG funding.
3. MALAYSIAN REGULATORY LANDSCAPE : MONEY FLOW AND COMPLIANCE
A. Bank Negara Malaysia (BNM) and Financial Reporting
Cross-border fund transfers must comply with foreign exchange documentation,
Reporting ensures compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.
B. Tax and Accounting
NPOs receiving grants are generally tax-exempt, but fees paid to private companies must comply with corporate tax and invoicing rules.
Transparent contracts and audited financial reporting are essential.
C. Audit and Transparency
NPOs must maintain robust financial controls; corporate partners must align internal accounting with project reporting requirements.
4. Bursa Malaysia CARBON EXCHANGE (BCX) : ANOTHER ESG FUNDING AVENUE
BCX enables the trading of voluntary carbon credits and renewable energy certificates (RECs), providing a market-based funding mechanism to complement grant funding.
Revenue generation: Companies can monetize validated emissions reductions,
Project validation: NPOs can assist in meeting BCX verification requirements,
Complementary financing: Carbon credits supplement UN grant funding, enhancing project viability,
Other agencies involved include Department of Environment Malaysia ( JABATAN ALAM SEKITAR MALAYSIA , Securities Commission Malaysia , and local NPO/validation partners.
5. The Malaysian ESG Ecosystem: Agencies and Platforms
Department of Environment (DOE): Environmental compliance and project validation,
Securities Commission Malaysia: Oversight of voluntary carbon markets,
MySDG Foundation and UN partners: Administer grant processes and SDG alignment,
Bursa Malaysia and BCX: Carbon trading and climate-aligned investment products.
This ecosystem enables Malaysian entities to combine grant funding, regulatory support, and market-based revenue streams.
6. TYPICAL STRATEGIES FOR SUCCESSFUL ESG PARTNERSHIPS
7. MISCONCEPTIONS AND RISKS : UN GRANTS, CARBON CREDITS AND FRAUD
Many in Malaysia overestimate the ease of accessing UN grants and carbon market revenue, leading to unrealistic expectations and exposure to fraud.
Common Misconceptions
“UN grants are easy to obtain.” Reality: Highly competitive and project-specific,
“Carbon credits automatically generate revenue.” Reality : Only properly validated projects can issue credits for trading.
Fraud and Scam Risks
Fake grant offers: Fraudsters may request advance fees or personal information,
Carbon credit scams*: Selling unverified or non-existent credits is a common fraud,
Unregistered NPO intermediaries: Using unaccredited partners can result in lost funding or compliance issues.
Carbon credit scams involve fraudulent schemes where fake, overstated, or worthless carbon credits are sold, often promising high returns but leaving investors unable to sell them, exploiting loopholes in the largely unregulated green investment market through misleading claims, fabricated projects, or misuse of government logos for crypto schemes, leading to significant financial loss while undermining genuine climate efforts. Common types include "ghost credits," "double counting,", selling credits for projects or crypto-related scams that aren't real reductions.
How They Work
High-Pressure Tactics: Unsolicited calls/emails, pressure to invest quickly, promises of unrealistic returns,
Misleading Claims: Marketing as "the new big thing," exploiting government focus on green initiatives,
Fake Certifications: Using voluntary certifications that lack strong oversight or recognition
Lack of Liquidity: Investors buy credits but can't find buyers to sell them to later.
How to Protect Yourself
Be Skeptical: Be wary of unexpected offers, especially those promising quick profits or using government-like branding.
Verify Contact: If a government agency is involved, contact them directly using official numbers, not from the scam email/call.
Seek Advice: Get independent professional financial advice before investing.
Check Regulation: Understand that the carbon market isn't fully regulated, meaning no compensation if you lose money.
Demand Transparency: Ask for detailed, verifiable information about the underlying project.
Real-World Examples
A billion-euro fraud involving so-called "Chinese Projects" approved under a German scheme. Investigations showing over 90% of credits from top providers like Verra might be worthless.
While carbon credits aim to fight climate change, the market is vulnerable to fraud; always verify the legitimacy of projects and be wary of aggressive sales tactics to avoid being scammed.
Safeguards
Verify all funding sources through official UN or BCX channels
Partner only with NPOs with proven track records,
Conduct rigorous due diligence and internal training.
ESG funding is valuable but not “easy money.” Structured partnerships, verification, and regulatory compliance are essential.
8. SAFEGUARDS AGAINST FUND MISUSE
There have been cases where grant funds were misused, either redirected to unrelated projects or used for personal benefit. To protect organizations and stakeholders, the following safeguards are critical:
Common Misuse Scenarios
Funds diverted to unrelated corporate or NPO activities,
Payments used for personal lifestyles or non-project purposes,
Poor documentation enabling undetected misappropriation.
Available Safeguards
Auditing and Financial Oversight – Independent and internal audits track fund allocation,
Clear Contractual Agreements – Define roles, responsibilities, and fund usage with disbursement tied to project milestones,
Monitoring, Evaluation, and Learning (MEL) Frameworks – Ensure funds are linked to measurable outcomes,
Transparency and Public Reporting – Public disclosure of budgets, activities, and results enhances accountability,
Regulatory Compliance – Adhere to BNM, LHDN (Lembaga Hasil Dalam Negeri) , and Companies Commission Of Malaysia / Suruhanjaya Syarikat Malaysia (SSM) regulations; non-compliance risks funding loss and legal consequences.
Capacity Building and Training – Financial management and governance training reduces misuse risk.
9. CONCLUSION : A PATHWAY FOR IMPACT AND SUSTAINABILITY
UN and related ESG funds provide meaningful opportunities for Malaysian ESG projects, but access is contingent on NPO partnerships, compliance, and robust project design. Complementary mechanisms like Bursa Malaysia Carbon Exchange enhance project viability, enabling companies and NPOs to create measurable environmental and social impact.
10. CALL TO ACTION
For Corporate ESG Teams:
Identify credible NPO partners with UN funding experience,
Explore pilot projects that deliver measurable ESG outcomes and carbon credits.
For NPO Leaders:
Strengthen grant proposal capabilities aligned with SDGs,
Maintain transparent governance to support corporate partnerships.
For Policymakers:
Support frameworks facilitating public-private collaboration,
Promote capacity building for local NPOs to engage with international funds safely.
Together, Malaysia’s public, private, and non-profit sectors can build a sustainable financing ecosystem that leverages global funding, national policy, and market innovation to achieve SDG ambitions.
Also Read : DONT FALL FOR HALF-TRUTHS - UNDERSTANDING PENSION FUND INVESTMENTS IN MALAYSIA
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