nor shamsiah mohd yunus : value based intermediation - beyond profit keynote address by ms nor shamsiah mohd yunus, governor of the central bank of malaysia ( bank negara malaysia ), at the global islamic finance forum 2018 ( giff ) " value based intermediation - beyond profit ", kuala lumpur, 3 october 2018. * * * henry ford, credited with revolutionising the american transportation industry in the 20th century, once remarked that “ business must be run at a profit, else it will die. but when anyone attempts to run a business solely for profit and thinks not at all of the service to the community, then also the business must die, for it no longer has a reason for existence ”. nearly a hundred years since, these words of wisdom remain true. perhaps, even more so now than ever. indeed, we have witnessed time and again, episodes of excessiveness, and the sole and unchecked pursuit of profits, that have led to global financial crises. the theme of this conference, “ value based intermediation – beyond profit ”, is therefore a fitting reminder of the role of finance, and islamic finance in particular, in helping build a more resilient and sustainable future. in the past half century, the world economy expanded sixfold, despite experiencing the worst and most expensive financial crisis. average per capita income more than doubled to about usd11, 000, compared to only about usd5, 000 in 1967. people are living longer, with better quality of life, greater access to basic necessities, improved health and medical care, and better education. despite such progress, we are faced with daunting challenges. these include harmful effects of environmental degradation and climate change that threaten global prosperity, stability and sustainable living. socioeconomic challenges such as rising inequality and lack of affordable housing are affecting the well - being of many communities. at around 225 % of global gdp, global debt is at a record high level and may leave a heavy burden for future generations to bear. it is increasingly clear that economic prosperity in the long run cannot exist without social equity and environmental responsibility. while the governments of 150 countries are committed to realising the united nation ’ s 17 sustainable development goals ( sdgs ) by 2030, this must be a shared responsibility. the private sector has a key role to play – a role, with finance at its centre, that has yet to live up to its full potential. with much at stake,

bankers'speeches to develop richer perspectives of social and environmental risks. this calls for a review of internal risk decision - making processes and inputs within financial institutions, alongside enhanced disclosures to market participants. yet little, if anything, is done today to consider how such risks need to be managed – both for existing portfolios and future growth strategies. actions taken by financial institutions to mitigate, transfer or control the risks have the potential to generate corresponding, broader responses by policymakers, businesses and other financial institutions. this in turn can create new markets for sustainability services, and a virtuous cycle of mutually reinforcing market forces, that promote sustainable business practices across the economy. as we further develop the vbi systems for islamic finance in malaysia, this will be an area of important focus. this work will also address the role of domestic regulations, in creating a level playing field, for value - based banking practices, where appropriate. to date, policy documents developed on 14 shariah contracts, serve to provide a clear and consistent framework for lending, underwriting and investment activities of islamic financial institutions. i am encouraged by efforts among some islamic financial institutions to introduce value - adding innovations, building upon these shariah contracts, and further differentiating their solutions from conventional offerings. i would of course like to see much more traction in this direction going forward. key message 3 – rethinking human capital my third point relates to rethinking human capital. despite growing awareness on the importance of sustainable business practices, in creating long term value and reducing risks, the challenges of building internal human capacity to support sustainable practices continues to be left largely unattended to. for islamic financial institutions, this goes beyond strategy alignment and culture, which has been the primary focus to date, to building or acquiring the fundamental skillsets, required to implement sustainable financing and risk management practices. without these, vbi cannot hope to progress very far. to illustrate, a study by the national bureau of economic research found that jobs requiring a higher intensity, and concentration of “ green skills ” to support the transition to greener economies, lies among high - skilled professional profiles. in other words, if islamic financial institutions are serious about adopting vbi, the complement of skillsets at the management levels of the organisation will need to be fundamentally re - assessed. relevant skills that need to be brought into the organisation include engineering and technical skills in the design, construction and assessment of technology ; science skills ; and monitoring skills focusing on