The Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF) Sectoral Guide Working Group (Working Group) today issued the first cohort of the VBIAF Sectoral Guides on Palm Oil, Renewable Energy and Energy Efficiency. The Working Group is spearheaded by the Value-based Intermediation (VBI) Community of Practitioners (CoP), which comprises twelve (12) members of the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM); (Agrobank, Alliance Islamic Bank Berhad, AmBank Islamic Berhad, Bank Islam Malaysia Berhad, Bank Muamalat Malaysia Berhad, CIMB Islamic Bank Berhad, HSBC Amanah Malaysia Berhad, Maybank Islamic Berhad, OCBC Al-Amin Bank Berhad, Public Islamic Bank Berhad, RHB Islamic Bank Berhad and Standard Chartered Saadiq Berhad).
The VBIAF Sectoral Guides serve as an in-depth impact-based risk management toolkit to guide the financial institutions in implementing VBIAF on selected sectors at a more granular and transactional level and were jointly developed by members of the Working Group which consists of the CoP and relevant stakeholders. They include Bank Negara Malaysia (BNM), Suruhanjaya Tenaga (EC), Pihak Berkuasa Pembangunan Tenaga Lestari (SEDA), Malaysian Green Technology and Climate Change Centre (MGTC), Malaysian Palm Oil Council, Malaysian Palm Oil Certification Council, World Bank Group (Malaysia office), World Wide Fund for Nature (WWF) and Sime Darby Plantations Berhad.
This is a key step towards enhancing the readiness of the financial institutions in playing a catalytic role towards realising the Government’s aspiration and commitment as a signatory to the 2015 Paris Agreement and to ensure sustainability of the entire palm oil supply chain and production as per Malaysian Sustainable Palm Oil (MSPO) standards. Collectively, these should pave the way for an orderly transition of the economy towards a low carbon nation. The VBIAF Sectoral Guides also support the climate-change initiative by BNM.
The VBIAF Sectoral Guides consist of the following components:
- Definition and scope;
- Commercial proposition;
- Impact-based risk categories;
- Risk metrics; and
- Risk management.
The first cohort of the VBIAF Sectoral Guides is a continuation of several guidance documents issued by BNM in collaboration with the CoP, and complements the broad guidance provided in the “VBIAF – Guidance Document” in the pursuit to incorporate environmental, social and governance (ESG) risk considerations in their financing and investment decision making process.
Eqhwan Mokhzanee, the Chairman of the Working Group, in his statement, said, “the issuance of the VBIAF Sectoral Guides is a monumental milestone for the Islamic banking industry in embracing VBI as a common vision for the industry. Thus, we are pleased to welcome feedback from the public on the inaugural VBIAF Sectoral Guides particularly from the experts, practitioners and industry players. This is to ensure the VBIAF Sectoral Guides could provide meaningful guidance for all financial institutions – both Islamic and conventional, to build a more climate resilient and sustainable future”.
The Working Group invites responses and feedback on the VBIAF Sectoral Guides which will be conducted for a period of 3-months starting 24 August 2020. The VBIAF Sectoral Guides can be viewed at https://aibim.com/VBI_VBIAF_Sectoral_Guide_Public_Consultation and all responses and feedback are to be submitted electronically by 30 November 2020 to vbi@bnm.gov.my