@ green | September-October , 2020

THANKFUL RECIPIENT : Maybank Islamic allocated RM2.9 million , which benefitted more than 15,000 less fortunate families across 10 Southeast Asian countries this year . Here is one of the recipients of the programme with her box of food essentials in Kelantan .

Can Islamic banks support the growing sustainability movement ?

Digital banking will definitely be part of the new normal of doing banking due to its seamless and efficient experience .”

Malaysia is no exception . However , the same period where factories , businesses and borders were closed has brought about an unintended benefit in the form of reduced activities that cause pollution .

Though the positive environmental effects could be short-lived as the global economy resumes , specific behavioural changes may be here to stay . Albeit the pace and degree of sustainable behaviour differs by region , today ’ s consumers are more aware of the broad sustainability challenges facing the world .

In a global survey conducted by Accenture to identify the impact of Covid-19 on consumer behaviour dated April 2020 , it found that consumers were more cognisant of limiting waste , cost-conscious and in favour of sustainable products .

Results show that 68 per cent of respondents prioritise limiting food waste , 54 per cent consciously make sustainable choices , and 39 per cent are reducing the frequency of shopping .

Despite the bleak scenario , the Malaysian Islamic banking sector is well-positioned to capture transformative opportunities amidst the potential downturn . It could potentially emerge from the Covid-19 crisis stronger and more sustainable .

Bank Negara Malaysia ( BNM ) last year introduced the Value-Based Intermediation Financing and Impact Assessment Framework ( VBIAF ) – a collaboration with Islamic banking industry players to guide and assess financing activities in accordance to value-based banking practices .

The initiative has spurred significant activity in the sector , such as the adoption of Environment , Social , and Governance ( ESG ) criteria as part of credit assessments . The VBIAF has contributed to the wider domestic banking industry as well , serving as a reference point for documents such as BNM ’ s discussion paper on Climate Change and Principal-based Taxonomy . It aims to increase awareness and encourage banking practices that align with climate change objectives .

Unlike other financial systems , Islamic Finance encompasses both commercial and socio-economic components . The latter comprises Zakat , Waqf , and Sadaqah , which could be mobilised to promote financial inclusion in supporting vulnerable segments of society as well as to preserve the environment .

In the face of Covid-19 , Malaysian Islamic Banks have played a proactive role towards delivering aid , sourced from their zakat and CSR funds , to those segments of the public or communities that were severely impacted by the pandemic .

Maybank Islamic allocated RM2.9 million , which benefitted more than 15,000 less fortunate families across 10 ASEAN countries . In addition , microfinancing programmes such as iTekad managed by Bank Islam , have demonstrated the benefits of utilising zakat funds to support micro-entrepreneurs affected by Covid-19 .

This shows that Zakat can be channelled to eligible recipients in ways that can empower them and help them generate a sustainable income . Another silverlining brought by the Movement Control Order ( Mco ) is the adoption of digital banking .

Apart from a sharp jump in digital banking transactions , Islamic banks have leveraged on digital channels to help those affected by the pandemic .

Platforms such as ‘ Sama-Sama Lokal ’ by Maybank , for one , has helped struggling Ramadhan Bazaar merchants , hawkers and farmers facing marketing and logistics issues during the Mco to gain awareness among the wider community via the Bank ’ s Maybank2U digital platform .

Moreover , Islamic banks facilitate the disbursement of Zakat and financial assistance via digital means such as e-wallets and mobile apps which are proven to be useful and effective amidst the movement control period .

Digital banking will definitely be part of the new normal of doing banking due to its seamless and efficient experience .

Hence , it is apparent that Islamic Banks are positioned and equipped to meet the evolving demands of consumers to potentially emerging from the Covid-19 crisis stronger .

As the global economy continues its inexorable shift towards sustainability , Islamic Banks must capitalise on its position at the forefront of the sustainability agenda by providing innovative Islamic Financial solutions to support the transition towards a more sustainable future . — @ green