Page 92 - Bank-Muamalat_Annual-Report-2023

BANK MUAMALAT MALAYSIA BERHAD

SUSTAINABILITY
GOVERNANCE

SUSTAINABILITY RISK MANAGEMENT
We recognise the threats posed by ESG and climate risks to our long-term value creation and overall performance. These risks
not only jeopardise business continuity and growth but are also under increasing scrutiny by stakeholders, making effective risk
management essential. To safeguard our business and stakeholder value, we implement specific measures and controls to mitigate
identified ESG and climate risks.

As a financial institution, we understand that one of the top ESG risks we face involves concerns that our customers’
business operations may negatively impact people and the environment. When we extend financing to our customers,
we are seen as their business partners and, therefore, have a responsibility to ensure their operations align with our
sustainability agenda. Non-compliance with global and local standards could result in business shutdowns by authorities
or hefty fines, impacting business continuity and the financial standing of our customers. Moreover, financing customers
with poor sustainability practices could lead to significant reputational damage for the Bank.
We have integrated the ESG Scorecard as a critical component of our assessment process, guided by BNM’s Due Diligence
Questions for evaluating BNM CCPT Guiding Principles 3 & 4 (GP3 & GP4). This structured approach ensures that our
assessments align with regulatory standards, specifically focusing on climate change and principle-based taxonomy requirements.
This scorecard serves as a comprehensive tool used by our relationship managers and business units to evaluate and
assign ESG scores, while also categorising climate change impacts based on BNM’s CCPT. This structured approach ensures
that our assessments are robust and aligned with regulatory standards, enabling us to effectively manage environmental,
social, and governance considerations across our operations and client interactions.

Environmental • Evaluation of Climate Change Risks
Assessment • Assessment of Supply Chain and Mitigation Strategies
Includes:
• Implementation of Procurement Policies Embedding
Sustainable Considerations
• Adoption of Deforestation Policies with Clear Land Clearance
Methods
• Implementation of Water Management Policies (e.g.,
sourcing, usage monitoring, pollution control)
• Implementation of Waste/Effluents/Chemical Management
Plans

Social • Compliance with Labour Laws, including Child Labour Laws
Assessment and Avoidance of Poor Labour Practices
Includes: • Compliance with Workers’ Minimum Standards of Housing
and Amenities Act 2019
• Conducting Social Impact Assessments where relevant
• Implementing Free, Prior, and Informed Consent where
relevant
• Implementation of Grievance Handling and Management
Policies
• Implementation of Occupational Safety and Health
Management Policies in compliance with ISO45001

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