The formation of the VBI Community of Practitioners manifests the leadership by Islamic banks in this area with some of its members also being part of the Joint Committee on Climate Change (JCC) that was recently formed in September and chaired by the Bank and Securities Commission. The JCC aims to look at and create greater synergy in development of climate-related solutioning for the capital and financial markets. It should be noted that many VBI offerings of Islamic banks are already meeting contemporary sustainability themes but more will be forthcoming. Those already on offer include green and specialised financial products and services for retail and SME markets, financial solutions for lower income households, custom products for women entrepreneur and SMEs, green solutions that promote environmental sustainability and innovative solutions that promote physical and mental well-being. Takaful operators are also taking steps to explore value-based protection for their customers. A dedicated task force has been formed by the takaful industry to formulate a strategic roadmap to advance VBI in their business offerings and practices. VBI also encourages Islamic financial institutions to play a greater nurturing role in advocating sustainable practices among clients, such as adoption of Malaysian Sustainable Palm Oil Certification, as well as providing necessary funding and technical advisory services. Part of the progress in advancing VBI as a driver for positive change in the Islamic financial services industry has been the Bank’s role in working collaboratively with the VBI Community of Practitioners.

There is also a more prominent role for financial institutions to advocate for or provide advisory services to businesses in sustainability areas. For Islamic finance, green sukuk issuances have served as a bridge between Islamic finance and sustainable investment. However, more is required for Islamic finance to have greater impact and this pursuit can be further enhanced with the VBI initiative. With this Islamic financial institutions will be able to play an important role in supporting the 2030 Government’s Shared Prosperity Agenda. Nevertheless this will not be without its challenges. Balancing different priorities on the social, economic and environmental fronts is a delicate act, as these may seemingly pull in different directions. It is inevitable there will be issues and challenges that need to be addressed on the path to attaining sustainability goals. I would like to touch on three key challenges and share the Bank’s views and strategies in responding to these and to further accelerate our journey. First, is the low level of awareness, understanding and appreciation of sustainability practices and what it entails among stakeholders. This has led to limited integration of sustainability-related consideration in individual and institutional practices. Knowledge gaps among financiers in technical areas of the sectors relating to sustainable or green financing such as renewable energy, sustainable agro-production and manufacturing, and social entreprenuership has naturally contributed to apprehension in financing new and relatively unknown sectors. A necessity in achieving scale will be to inculcate awareness on the need for and benefits of a green and sustainable economy.