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BANK ISLAM LAUNCHES ESG RISK MANAGEMENT FRAMEWORK

Bank Islam Malaysia Berhad (Bank Islam or the Bank) declared that, in keeping with its dedication to banking sustainability, the ESG Risk Management Framework had been made public.

The development of the framework, initiated in the third quarter of 2021, is intended to  introduce a fit-for-purpose ESG and climate risk management framework and enhance the  Bank’s Board oversight on ESG and climate matters.

Bank Islam will embed ESG risk considerations in its credit assessment process and leverage  climate risk stress-testing to enhance the Bank’s capabilities in addressing the impacts of  climate change on the Bank and its customers.

Bank Islam’s Group Chief Executive Officer, Mohd Muazzam Mohamed, said, “As part of  our broader aspirations to be the leading Islamic financier in Malaysia, we implemented  approaches to consider the ESG risk profile of our customers as part of our financing origination process. This move aims to improve our customers’ sustainability, as it aligns with  regulators’ key global and local efforts in building a resilient financial system.”

While the ESG Risk Management Framework is in progress, Bank Islam has taken steps to  assess new financing applications for ESG risks with elevated concerns on ESG based on industry-specific context.

The Bank aims to double its Shariah-ESG assets to RM4 billion by the end of 2025, from RM2.62  billion recorded in June 2022. This is up 16.4% compared to RM2.25 billion in the same period  last year.

He adds, “Beyond developing our assessment scorecards and mechanisms for ESG and  climate risk, we will also support our customers in their transition to low carbon development

and contribute to Malaysia’s net-zero ambitions as part of their Value-Based Intermediation  initiatives.”

Driven by the aspiration, the Bank, via its corporate social responsibility arm, AMAL Bank  Islam (AMAL), recently rolled out a community service and sustainability programme at  Mabul Island, Semporna, Sabah. The programme, which took place from 8 to 9 October  2022, aimed to establish holistic, sustainable living in the community by incorporating green  technology and eco-friendly applications, upgrading proper sanitation systems at homes  and supporting its economy and welfare.

AMAL collaborated with a non-profit organisation, Persatuan Kebajikan Sedulur (Sedulur),  to execute five initiatives to empower the community. It includes installing solar panels for  the electricity supply at a school for stateless children, Sekolah Saudara Borneo,  constructing a new and proper sanitation system for the school and selected homes on stilts  to protect the growth of seagrass in the designated area, and upgrading the community  square complete with solar lights, which acts as a central square for the community. AMAL  also supplied equipment to local shopkeepers and small businesses around the island to  boost the local economy and portable solar lights, food packs and reusable sanitary pads  to the Bajau Laut community.

In addition, AMAL partnered with ReefCheck Malaysia to gauge the effectiveness of the  installed sanitation system by monitoring the growth of seagrass and the biodiversity of  marine life around Mabul Island.

AMAL continued to form a strategic partnership with Yayasan Sabah College of Technology  (YSCT) to provide much-needed assistance to the Pusat (AMAL) Latihan dan Amali Orang  Kelainan Upaya (OKU) Sabah in Tuaran. Pusat (AMAL) Latihan dan Amali OKU Sabah is a  training institution that trains physically disabled individuals in acquiring new skills such as  carpentry and furniture making and other vocational skills to supplement their livelihood.

The Bank provided cash contributions to assist in the rebuilding efforts for its carpentry  workshop, which was damaged by the flood last year. At the same time, YSCT provided a

group of 20 lecturers and student volunteers to aid in fixing the electrical and wiring of the  centre, enabling the workshop to reoperate.

Mohd Muazzam further said, “Bank Islam is committed to supporting projects which protect  the prosperity of people and the planet. Aligned with our vision as a Bank that advances  prosperity for all, we will continue to incorporate community empowerment and  sustainability in all our business strategies, while respecting planetary boundaries,” he  concludes.

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