In the country’s first for any financial institution, HSBC Amanah has rolled out its triple bottom line (TBL) framework, with a view of aligning 51% of its financing portfolio to the new framework as the Islamic bank pushes forward its social and environmental agenda.
Announced at the Islamic Sustainable Finance and Investment Forum co-hosted by REDmoney Group and Capital Markets Malaysia today, the TBL framework intends to be a comprehensive approach to classification, governance and process implementation in relation to financing assets that are originated by and/or managed by HSBC Amanah. Under the framework, financing assets will undergo a dual-screening process — at the customer level and at the transaction level.
“This is to ensure that we encompass both income profiles as well as what was the financing facility utilized for. Be it for health purposes, homeownership or even further education, amongst others,” explained Raja Amir Raja Azwa, CEO of HSBC Amanah, at the launch.
The framework is guided by Bank Negara Malaysia’s Value-Based Intermediation (VBI) as seen through the lens of the triple bottom line — planet, people, prosperity, rather than the conventional single bottom line which is often synonymous with profitability. VBI, introduced in 2018 by the central bank, promotes a more holistic observation of Islamic principles, beyond Shariah compliance by delivering the intended outcomes of Shariah through practices that generate positive and sustainable impact to the economy, community and environment, while being consistent with shareholders’ sustainable returns and long-term interests.
“The TBL framework was formulated with reference to authoritative sources, namely the collective VBI guidance parameters for Malaysia, HSBC Group’s sustainability policies as well as prevailing policy directions in Malaysia as well as globally. With this, we have set the baseline for the future via a robust framework of assessment and classification that can and will be applied to our financing portfolio,” said Raja Amir.
This latest initiative is another feather in the Islamic bank’s sustainability hat. HSBC Amanah has been aggressive in pursuing its sustainability agenda. It is an active member of the Joint Committee on Climate Change (JC3) — a Bank Negara Malaysia and Securities Commission Malaysia initiative — since 2019 and chaired the JC3 subcommittee in 2020 and 2021 on engagement and capacity-building. It was also the one of the first banks in Malaysia to issue a Task Force on Climate-related Financial Disclosures report last year.
The proactive stance of the Shariah bank is in line with its parent group’s sustainability ambitions. HSBC Group targets to become net zero in its operations and supply chain by 2030 and has aligned its financed emissions to the Paris Agreement goal of net zero by 2050. Last year, the group set on-balance sheet financed emissions targets by 2030 for the oil and gas, and power and utilities sectors, in tandem with the International Energy Agency’s net zero scenario.
“HSBC Amanah will undertake an independent verification to ensure the integrity of this classification process. With the establishment of the triple bottom line framework, it is our intent to lay the foundation building upon an outcomes-based model of banking in line with the Shariah and continually improving toward these aims as an international Islamic bank,” Raja Amir said.