Bank Islam aims RM4b syariah-ESG assets by 2025

KUALA LUMPUR: Bank Islam Malaysia Bhd aims to double its syariah-ESG (environmental, social & governance) 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, the bank said today in conjunction with the launch of its ESG Risk Management Framework.

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 group CEO Mohd Muazzam Mohamed said as part of its broader aspirations to be the leading Islamic financier in Malaysia, it implemented approaches to consider the ESG risk profile of its customers as part of its 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.

“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.”

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