Management Executive Management, led by the Group Chief Executive Officer (GCEO) plays a crucial role in the integration of sustainability within the Group’s business operation. The Management Sustainability Committee (MSC) governs and guides the Group’s overall sustainability strategy, including steering the development and implementation of the plan and initiatives to achieve the Group’s sustainability goals. The committee reports directly to the BSSC, ensuring alignment with the broader strategy. Additionally, the Management Risk Control Committee (MRCC) oversees the effective management of all sustainability and climate-related risks, reporting to the BRC. Group Sustainability Division In 2024, the Group strengthened its commitment to sustainability by establishing the Group Sustainability Division as a standalone division, reflecting the strategic importance of sustainability considerations in driving long-term value. To lead this division, the Bank appointed its first Group Chief Sustainability Officer (GCSO) in December 2024. This strategic appointment reinforces the Group’s focus on embedding sustainability across all business operations and ensuring the effective execution of the Group’s overall sustainability strategy and initiatives. The division is responsible for developing and driving the Group’s overall Sustainability Plan, ensuring alignment with the Group’s commitment to managing sustainability risks and opportunities. This involves integrating climate-related risks and opportunities into strategic planning, assessment, and monitoring processes to support sustainable growth. Key responsibilities include developing and overseeing the Sustainability Plan and Policy, embedding sustainability into the Group’s risk management framework, managing GHG emissions data (Scope 1, 2, and 3), leading climate scenario analysis and the climate transition plan, ensuring compliance with regulatory-aligned sustainability disclosures, and collaborating with key divisions to identify sustainable finance opportunities and strengthen ESG risk controls. This comprehensive and integrated approach enhances governance, mitigates risks, and reinforces the Group’s longterm resilience and sustainable growth. Sustainability Linkages to Pay To further reinforce accountability and drive the successful execution of our sustainability strategy, the Group has integrated sustainability-linked performance indicators into the corporate scorecard and individual Key Performance Indicators (KPIs) across relevant business units and divisions. This approach directly ties performance outcomes on key ESG/Sustainability targets — including climate action, sustainable financing growth, and operational carbon reduction—to compensation and incentive structures. By aligning financial rewards with the achievement of sustainability goals, the Group ensures that sustainability is embedded into decision-making at all levels, fostering a performance-driven culture that supports long-term value creation and responsible growth. Sustainability Risk Management Sustainability risk and climate-related risk are inherently interconnected, with climate-related risk being a critical component of overall sustainability risk. Sustainability risk encompasses environmental, social, and governance (ESG) factors that may impact an organisation’s financial performance, reputation, and long-term resilience. Climaterelated risk specifically focuses on environmental risks arising from climate change. At Bank Islam, it is managed through the following: (a) Development of an appropriate climate-related risk management framework; (b) Assessments of the Group’s climate-related risk exposure to both physical and transition risk; (c) Development of monitoring and mitigation strategies to manage the Group’s climate-related risk exposure to both physical and transition risk; (d) Monitoring of the Group’s portfolio exposure to climaterelated risk and develop risk appetite limits and statements on sectors most exposed to climate-related risk; (e) Training delivery and awareness raising on climaterelated risk management to BU/ SU; and (f) Development of disclosures on climate-related risk management to enable stakeholders to better understand and assess Bank Islam’s exposure to and management of climate-related risks in a transparent and consistent manner. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 260 Statement on Risk Management and Internal Control
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