As more plantations embrace sustainability practices, this will enhance the industry’s international reputation and may even elevate Malaysia to be a global leader in sustainable palm oil. At the same time, the income and livelihood of smallholders would also improve as their outputs benefit from better market access upon being certified. DFIs could consider adopting the Value Based Intermediation Assessment Framework or VBIAF sectoral guides on palm oil6, developed by the Islamic financial industry which provides guidance on overlaying credit or investment decisions with ESG considerations. Thirdly, DFIs can onboard or nudge plantations to work towards enhancing the living conditions of estate workers by incorporating this as part of the credit assessment process. This ensures palm oil plantations meet the basic needs of workers i.e access to safe drinking water and proper housing. This is a specific use case where sustainable finance can contribute towards strengthening Malaysia’s sustainable economic growth but in order to execute this well, DFIs need to work with other partners across the public and private sectors, which leads me to my next point. DFIs should be creative in designing innovative funding structures and solutions that leverage on the capacity of the private sector and knowledge from other partners, including peers and the Government. 2/5  BIS central bankers' speeches  DFIs are often constrained by the size of their balance sheet or capital and take on outsized risks in specific sectors in serving their mandates.

DFIs should look for like-minded partners across the public and private sector to collectively advance the national goals of achieving sustainable development. We see industry collaboration and collective action as a critical component of achieving higher, wider and more impactful societal and economic goals. This is evident through the work done under VBI where several DFIs are part of the community of practitioners or COP. The COP pools resources and expertise, enabling members to accelerate learning as well as drive several common initiatives together such as the issuance of VBI sectoral guidelines. Another important driver for sustainable finance is the need for it to be institutionalised and embraced throughout the organisation, with clear leadership or a tone from the top. This will ensure that a clear message resonates throughout the organisation of the commitment and intent that can then drive organisational initiatives, supported by the necessary infrastructure and systems to create change. With that, I wish you all a productive webinar and all the best in this important journey. 1 www.adb.org/news/covid-19-economic-impact-could-reach-8-8-trillion-globally-new-adb-report 2 4/5  BIS central bankers' speeches  2 www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-as-150-million-extreme-poor-  by-2021 3 news.un.org/en/story/2021/06/1093182 4 www.mckinsey.com/featured-insights/future-of-work/covid-19-and-gender-equality-countering-the-regressive-  effects 5 public.wmo.int/en/media/press-release/climate-change-indicators-and-impacts-worsened-2020 6 aibim.com/contents/upload/VBIAF_Sectoral_Guide_Palm_Oil_Public_Consultation.pdf  5/5  BIS central bankers' speeches