Why is this important? Prioritisation and integration of sustainability-related factors into financial products and services may lead to financial uncertainties such as financial underperformance, where the returns might not be as expected. Transitioning to a more sustainable and greener financial portfolio may open up the Group to additional associated costs such as transition costs and regulatory compliance costs. Risks Focus on financial stability, customer-centricity, technological advancement, ESG integration and social responsibility. Align with broader trends in Islamic and sustainable banking. Being strategic and prudent in making sustainability-related investments. Our Approach Promote long-term value creation by exploring investment in new markets or sectors that can generate financial returns coupled with positive social and environmental impacts. Promote engagement with customers on the effectiveness and viability of sustainability-related products and services. Strengthen the Group’s current reputation and commitment within the social finance sphere. Opportunities We are dedicated to integrate sustainable and responsible finance into our core operations, aligning ourselves with national and global development goals to significantly enhance our reputation and appeal to ethically-conscious customers. By prioritising social and environmental responsibility alongside financial stability, we aim to drive impactful, long-term value for our stakeholders. Business Context MANAGEMENT APPROACH TO MATERIAL MATTERS SUSTAINABLE AND RESPONSIBLE FINANCE For more information on Sustainable and Responsible Finance, please see pages 109-113. MATERIALITY MATRIX The top 6 material matters High Medium Medium High Low Low Influence on stakeholder Significance of impact on Bank Islam Risk Management Environmental Stewardship Labour Standards and Practices Sustainable Economic Performance Collaboration & Partnerships Community Empowerment and Social Finance Sustainable Supply Chain Employee Well-being, Health, and Safety Diversity and Inclusion Customer Experience Corporate Governance and Business Ethics Data Privacy and Security Purposeful Financial Services Talent and Development Energy and Climate Change Environment Governance Social Economic ECONOMIC Note: Some terminology within the materiality matrix has been updated to reflect changes made since the initial materiality assessment in 2022. This update involved a more holistic approach to enhance the clarity of our material matters. 49 1 2 3 4 5 6 7 8 9 www.bankislam.com MANAGEMENT DISCUSSION AND ANALYSIS – STRATEGIC REVIEW
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