Description Our Response Future Priorities As the economy transitions to a low-carbon and sustainable model, the need for ESG integration and climate risk management among banks has become more pressing. The growing demand for green financing options and the mandate for Malaysian financial institutions to adopt TCFD recommendations by 2024 is accelerating this shift. This commitment extends beyond prevailing trends or regulatory pressures; it is rooted in our core values as an Islamic financial institution and upholds the principle of doing what is fundamentally right. Banks that prioritise transparency, compliance, and longterm sustainability will strengthen their resilience and competitiveness in an evolving regulatory landscape. • Completed remaining deliverables to comply with BNM’s CRMSA Policy Document by 31 December 2024, including: • Developing a climate strategy for the construction sector as a pilot, focusing on business opportunities with identified customers. • Establishing a Group Sustainability Policy that incorporates our Board-approved policy on climaterelated disclosures. • Aligning our annual climate-related disclosures with the TCFD recommendations. For more details on our sustainable finance initiatives, please refer to our Sustainability Statement on pages 137-141. • Building our internal capacity to manage climate change and sustainability risks and opportunities effectively. • Enhancing our reporting and transparency to meet stricter regulatory and stakeholder requirements. • Integrating sustainable practices into our financial operations and decision-making. • Leveraging advanced financial technologies for improved ESG data management and analytics. Risks • Regulatory and compliance challenges due to evolving sustainability requirements, including TCFD recommendations and stricter disclosure expectations. • Financial and market risks from redirecting our capital away from carbonintensive industries, potentially affecting our short-term returns. Opportunities • Expanding our green financing offerings through sustainable investments, ESGlinked financing, and capital reallocation. • Strengthening our market position and long-term resilience by embedding climate risk management and sustainability-driven financial strategies. • Building stakeholder trust and regulatory alignment through enhanced transparency and disclosure on our environmental impact, financial sustainability, and climate resiliency. CLIMATE CHANGE AND SUSTAINABILITY Key Alignments Capitals FC SR NT Stakeholders CU GR Material Matters SRF EEI CRO Strategies SP Risks and Opportunities IV 45 w w w . b a n k i s l a m. c o m 01 02 03 04 MD&A – STRATEGIC REVIEW 05 06 07 08 09
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