STRATEGIC COLLABORATIONS SUKUK WAKALAH SUSTAINABILITY INITIATIVES TO REDUCE OPERATIONAL FOOTPRINT CAPACITY BUILDING ON SUSTAINABILITY STRATEGIC SUSTAINABILITY INITIATIVES @MBSB BANK J A N . 2 0 2 3 | V O L . 1 IN REVIEW 2022
In 2015, the United Nations adopted a plan to help create a prosperous future for the planet. The agenda establishes 17 Sustainable Development Goals (SDGs) toward which all 193 member countries of the United Nations are working on. Throughout this bulletin, you will see MBSB Bank's efforts to provide sustainable and innovative solutions benefiting our community aligns with the SDGs. UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS
SUSTAINABILTY VISION : SUSTAINABILITY MISSION STATEMENT : To provide sustainable and innovative solutions benefiting our community. Aims to foster Islamic values by: Contributing and investing in our customers and community to improve quality of life. Prioritising environmental stewardship and social responsibility whilst delivering value sustainably. Delivering innovative financing solutions in a fair, inclusive and transparent system. Pillar 1 - Innovating and creating value Propelling MBSB forward as a leading Islamic bank by providing innovative and sustainable solutions to our customers and communities. Innovating sustainable Islamic finance Expanding green financing Strengthening MBSB’s brand Prioritising customer engagement and satisfaction G oals SUSTAINABILITY PILLARS : Pillar 2 - Operating Sustainably and Responsibly Upholding environmental stewardship and social responsibility in MBSB’s business operations. Advancing SMEs and local communities Combating climate change Enhancing digital processes Embedding sustainable practices across the value chain G oals Pillar 3 - Creating a Fair, Safe and Inclusive Workplace Continuously striving to enable a conducive and safe working environment for all employees while ensuring opportunities for continuous professional and personal development. Upholding integrity through compliance Developing workforce capabilities G Workforce diversity and equality oals
SUSTAINABILITY JOURNEY Establishment of Sustainability Department. . 1 2 4 3 June 2022 February 2022 Board approval of MBSB Bank's Sustainability Framework. July 2022 Completion of MBSB Bank's Scope 3 Financed Emissions Baseline Calculations and Board Approval of Overall Sustainability Governance Structure. Completion of our Sustainability Framework with vision, mission, 11 overall goals leading to 24 initiatives and 72 targets. This is guided by our three sustainability pillars, which are aligned with the United Nations’ Sustainable Development Goals. Implementation of 72 Targets from the Sustainability Framework. (2023 - 2028) Compliance to BNM's Climate Risk Management and Scenario Analysis (CRMSA) policy document. (2022 - 2030) (2023- 2025) Compliance to EPF's Climate Change issue policy, Workers' Wellbeing issue policy and Sustainable investment Priority Sector Policies.
The Sarawak Economic Development Corporation (SEDC & SEDC Energy) MBSB Bank participated in the fifth International Sustainable Energy Summit 2022 (ISES 2022) which was organized by the Sustainable Energy Development Authority (SEDA) in collaboration with Ministry of Energy and Natural Resources. SEDA is MBSB Bank's existing retail deposit team. The two-day summit was attended by representatives from the Business Teams, Chief Treasurer and Capital Markets Officer and Chief Strategy Officer with support provided by the Strategic Marketing and Communications Department in making the event a success. Sukuk Wakalah (Signing Ceremony) The world’s First Dedicated Sustainability Sukuk Programme by an Islamic Bank. MBSB Bank signed an agreement with Maybank Investment Bank Berhad for the establishment of a RM5 billion Sustainability Sukuk Wakalah Programme. The Sukuk Wakalah Programme is managed by the Treasury Division The Sukuk Wakalah Programme is governed by the Sustainability Sukuk Framework and it was assessed by MARC Ratings Berhad, an independent external reviewer. The Framework and assessment by MARC can be accessed via our website here. Propelling MBSB forward as a leading Islamic bank by providing innovative and sustainable solutions to our customers and communities MBSB Bank successfully priced the inaugural RM300 million Sustainability Sukuk Wakalah offering (“Offering”) under its dedicated RM5 Billion Sustainability Sukuk Wakalah Programme. MBSB Bank used the proceeds received from the Offering to finance its green and social related projects which is in line with the Bank’s strategic plan to actively participate in renewable energy projects and other projects as defined under the Sukuk framework. International Sustainable Energy Summit 2022 Sukuk Wakalah (First Issuance) PILLAR 1 - INNOVATING AND CREATING VALUE The Corporate Banking team is leading efforts to explore green financing opportunities with the Sarawak Economic Development Corporation (SEDC) and SEDC Energy specifically for Electric Vehicles (passenger cars and commercial trucks and buses) to replace existing state transportation assets. Target is to reach disbursement of RM 100 million for EV transport by 2023. The Sukuk Wakalah Programme was awarded Pioneer Sustainable Developement Action Recognition by United Nations Global Compact Malaysia and Brunei Sustainability Performance Awards 2022 on 9 December 2022.
Energy Efficiency & Water Saving Features MBSB Bank is targeting an initial 10% reduction in energy use for 2023. An energy audit was conducted on 14 October for Menara MBSB Bank and Wisma MBSB. The final selection of the vendor for the implementation phase will be completed by the Building Maintenance Unit and Sustainability Department by February 2023. For branches, energy and water saving requirements were included for 18 branches undergoing physical transformation in 2022. These requirements include inverter air-conditioners and LED lightings for energy saving measures and dual flush systems and self-closing taps for water saving measures. Upholding environmental stewardship and social responsibility in MBSB’s business operations. Improving Waste Management and Segregation Practices A new waste contractor was appointed in June 2022 to handle general and recyclable wastes. Prior to this, all wastes was intermingled and there was no separation of recyclables. The waste contractor is contractually required to provide MBSB Bank with monthly reports on quantity of general waste and recyclables. The Sustainability Department conducted briefing sessions with the cleaners to demonstrate the correct way to separate general and recyclable waste and instructional posters were placed above recycling bins on each floor. Next step is the development of an instructional video on waste recycling and separation by Strategic Marketing Communication Department (SMCD) that will be shared bank-wide in 2023. The above exercise is important as the monitoring and reporting of waste data is required under Bursa Malaysia's enhanced disclosure requirements issued on 26 September 2022. E-Statement Initiative (Source Reduction) New deposit customers can access their e-statements via MJourney Retail Internet Banking or Corporate Internet Banking starting January 2023. Existing customers may visit branch to opt for option to switch to estatements. This initiative enhances our digital processes and presents an opportunity to reduce paper waste. Improvements to Data Collection for Scope 3 Financed Emissions. Calculating financed emissions is the first step in defining the decarbonization strategy for MBSB Bank. Sustainability Department and Business teams are working together to identify specific improvements to data collection during the onboarding process and development of targeted customer engagement strategy. 1st engagement session was held on 14 July 2022 and 2nd engagement session was held on 11 August 2022 with Corporate Banking, Consumer Banking and Financial Market teams. One on one sessions were also held with Wholesale Banking, Equipment Banking and Trade Finance Business to understand some of the difficulties faced in data collection and obtain input on a suitable customer engagement strategy. PILLAR 2 - OPERATING SUSTAINABLY AND RESPONSIBLY
A supplier code of conduct was developed and issued to all vendors on 15 October 2022 by the Procurement Department with support from the Sustainability Department. The supplier code of conduct is the first step in engaging with our vendors on sustainability. In 2023, the Procurement Team will be up skilled on sustainable procurement practices. Additionally, MBSB Bank's existing procurement policies and procedures will be updated to align with the ISO 20400 Sustainable Procurement Guidance Standard. Supplier Code of Conduct Upholding environmental stewardship and social responsibility in MBSB’s business operations. MBSB's Sustainable Events Guideline Community Investment Framework (CIF) The CIF, once developed will highlight mutually beneficial relationships between MBSB Bank and its local stakeholders while aiming to contribute toward long-term improvements in the quality of life for local communities. Through the CIF, MBSB Bank hopes to support capacity building, livelihoods development, skills transfer, and access to social services and infrastructure. The development of the CIF will be spearheaded by SMCD with support from the Sustainability Department and the Shariah Division. MBSB Bank's Sustainable Events Guideline was developed and issued by the Sustainability Department for internal stakeholders who organize events, meetings, workshops, trainings and employee engagement activities. PILLAR 2 - OPERATING SUSTAINABLY AND RESPONSIBLY MBSB’s Sustainable Events Guideline is a visible representation of MBSB Bank’s commitment to being an environmentally and socially responsible organization by adopting the principles of avoiding, reducing, reusing, and recycling which can significantly minimize the direct environmental footprint of the events we organize. Next step is a socialization exercise for interested parties on practical implementation of the guideline.
Dialogue Session on Enhanced Disclosure Requirements by Bursa Malaysia. GRI Certified Training. The dialogue session was hosted by Institute of Corporate Directors Malaysia on 12 December 2022 and attended by the Sustainability Department to understand the new disclosure requirements. A representative from the Sustainability Department attended a 3-day Global Reporting Initiative (GRI) certified training course which is a globally recognized sustainability reporting standard. The GRI certified training is part of the plan to upskill the Sustainability Department on sustainability reporting requirements. First introductory session with United Nations Global Compact Malaysia was held in March 2022. At least one module will be made compulsory for completion for all executive level staff by end of 2023. The link to the UNGC Academy be found here. General Sustainability Awareness Climate Risk Sustainability Reporting Continuously striving to enable a conducive and safe working environment for all employees while ensuring opportunities for continuous professional and personal development. In-Service Program (INSPRO) Non-Executive Employees All new employees are provided an introductory briefing on sustainability @ MBSB Bank via the In Service Program (INSPRO). An inaugural general sustainability awareness session was conducted on 29 October 2022 for nonexecutive employees by the Sustainability Department and HR Division (specifically Industrial Relations and Training). The general awareness training was followed by a focus group discussion led by Ernst & Young to obtain feedback on material matters for sustainability. This was the first time non-executive level employees was included in the stakeholder engagement survey. Approximately 100 Relationship Managers from Corporate Banking, Commercial banking and Trade Business from HQ and branches have been selected to attend climate risk workshops. The workshops will be held over a 2-day period in small groups of 20-25 participants with the objective to: PILLAR 3 - CREATING A FAIR, SAFE AND INCLUSIVE WORKPLACE Introductory training on climate risks for Board members will be completed by 1Q of 2023. Training to be conducted by Ms. Marie Morice, Head of Sustainable Finance at UNGC and Mr. Faroze Nadar, Executive Director of UNGC Malaysia. Under BNM's Climate Risk and Scenario Management Policy Document, the Board and senior management are required to have a sound understanding of climate-related risks. E-Learning for Sustainability via UNGC Academy Portal Training of Board of Directors Workshops for Relationship Managers 2. Develop skills to engage customers on sustainable and transition financing opportunities. 1. Train front line bankers to spot sustainable financing and transition financing opportunities. 3. Develop skills to engage customers on climate change risks.
STRATEGIC COLLABORATIONS We rely on data to optimize your campaigns for the best possible outcomes. First, identify your target reader. At MBSB Bank, we believe that strategic collaborations and an inclusive participatory approach is the only way we can make any meaningful positive impact from a sustainability perspective as an Islamic financial institution. From capacity building, engagement on climate change and embedding value-based intermediation (VBI) principles under the ambit of Islamic financing, we seek to increase our impact through partnerships and coalition-building. In 2022, some examples of our strategic collaborations are as follows: We rely on data to optimize your campaigns for the best possible outcomes. First, identify your target reader. Signing ceremony with UGNC was held on 17 February 2022 at Menara MBSB. UNCG is the world’s largest corporate sustainability initiative, and this event marked our participation as a member of the Malaysian chapter of UNGC. Our membership will allow us to leverage on the expertise already built by UNGC and expand our network with other members to accelerate capacity building and development of in house knowledge on Sustainability and ESG issues. FEBRUARY 2022 UNITED NATIONS GLOBAL COMPACT MALAYSIA AND BRUNEI (UNGCMYB) We rely on data to optimize your campaigns for the best possible outcomes. First, identify your target reader. JOINT COMMITTEE ON CLIMATE CHANGE (JC3) MARCH 2022 The Head of Sustainability of MBSB Bank participated as a member of the Joint Committee on Climate Change (JC3) subcommittee on Bridging Data Gaps. This membership will allow us to leverage on information sharing with other JC3 members who have already embarked on meeting the requirements of BNM’s policy document on climate risk management and scenario analysis and provide early insights on data gaps and access to data providers who may be able to close the data gaps and provide access to climate data providers. The Joint Committee on Climate Change (JC3) sub-committee on Bridging Data Gaps issued the key findings and recommendations to bridge data gaps in December 2022. The link to the report can be found here. THINGKING GLOBALLY, ACTING LOCALLY UN SUSTAINABLE DEVELOPMENT GOALS APRIL 2022 ASSOCIATION OF ISLAMIC BANKING INSTITUTIONS MALAYSIA (AIBIM) MBSB Bank is a proud member of MyWakaf 2.0 which is an initiative under AIBIM to drive Islamic banks to be key players and enablers of waqf development in Malaysia. The Shariah Division and Sustainability Department participated in the inaugural briefing session on 3 November 2022. The main focus of MyWakaf 2.0 is to deliver impactful project to assist social economy development through the four (4) focus sectors i.e.(1) Health & Healthcare (2) Education (3) Community Empowerment & (4) Investment. DECEMBER 2022 In line with the value-based intermediation (VBI) principles and as our starting point of our decarbonization journey for a climate neutral portfolio, our membership as one of the VBI Community of Practitioners under AIBIM would be a good platform to understand what other IFIs are doing at a strategic level and as an avenue for sharing of knowledge, expertise and best practices. The Sustainability Department will lead this strategic collaboration in partnership with the Shariah Division.