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Making strides with ESG

Danial Norjidi

Since embarking on its journey of aligning with environmental, social and governance (ESG) values in May 2021, BIBD Securities Sdn Bhd (BIBDS) has continued to make great strides forward.

Reflecting on the progress made, Managing Director of BIBDS Haji Muhammad Yazid bin Dato Paduka Haji Mahadi recounted that the Bank Islam Brunei Darussalam (BIBD) Group established its overall Sustainability Framework last year, alongside the announcement of BND2 billion in its commitment by the Group to sustainable funding by 2030.

In line with the Sustainability Framework is BIBDS’ ESG approach, which is designed to create value for the planet, society, family, investors and employees.

This approach has seen the introduction of what BIBDS calls ACE – Alignment, Continuity and Education. With regards to ‘Alignment’, BIBDS’ ideals and governing principles are aligned with the Brunei Darussalam National Climate Change Policy, Syariah principles and the local cornmunity; in terms of ‘Continuity’, their goals and actions are focussed on creating sustainable, achievable and impactful outcomes; while for ‘Education’, the aim is to facilitate learning both externally through financial literacy and internally via personal development.

“This introduction of our values or the ‘ESG DNA’ into BIBDS on how we do things is very critical in ensuring that we are all aligned to our overall vision. With that, we developed the ESG Charter that determined first and foremost the values of ACE and also how we go about doing things,” explained Haji Muhammad Yazid.

He further highlighted that BIBDS, as an Islamic financial institution founded on and driven by Maqasid Syariah, in combination with ESG values, creates something that is unique.

Another key achievement he noted was when BIBD Asset Management (AM), the asset management arm licensed under BIBDS, in September last year became the first entity in Brunei to be a signatory of the United Nations Principles of Responsible Investing (UN PRI), the world’s leading proponent of responsible investment.

According to BIBD AM’s Head of Institutional Asset Management Jason Wong, “The UN PRI is always something that has been a backbone to our ESG journey. It forms a part of our commitment to this process and also allows us to tap upon the international standards that have been set by UN PRI.”

BIBDS’ ESG journey continued with the December 6, 2021 launch of a new Syariah-compliant fund in the sultanate aligned with ESG values: the Arabesque Q3.17 SICAV – Global ESG Momentum Flexible Allocation fund.

Haji Muhammad Yazid said that the reception to the fund has exceeded expectations, having gained a positive response particularly from the younger and working population of Brunei.

He attributed this to two factors, with one being that the fund is more in line with the risk appetite of the younger generation.

Another factor is the strategy, as it is a very thematic kind of investing. “It is looking at companies that have very strong values and credentials that are aligned towards ESG, for which, in my opinion, the awareness is greater especially among the younger generation that we have in Brunei.”

“The launch has been a success despite having been a rocky year for global markets. We still see quite good positive interest amongst our clients in this particular fund,” he added.

This month, BIBDS’ ESG journey continued with another milestone as BIBD AM launched its first ESG Sukuk Strategy.

As Jason explained, “This is an investment strategy that we offer to our institutional clients so that we can manage their investment assets on their behalf. It’s not something that we market to the retail investors at the moment, but it’s something that we hope to potentially do in the future.”

Jason described it as a homegrown investment strategy to manage ESG Sukuk. “BIBD Asset Management is the first and only registered Islamic Syariah-compliant asset manager in Brunei, so we are very proud to be able to manage and also maintain all of the clients’ assets in-house, in Brunei, without the use of external consultants or advisors.”

He said the strategy aims to produce high risk-adjusted returns by limiting investments in potentially high sources of ESG risk, while also prioritising sustainable and self-sufficient businesses. “So we’re looking to invest into businesses that have recurring cash flows, that have limited exposure to ESG issues and also ensure that they are, from a Syariah perspective, giving back to the community.”

Jason also highlighted that it is Brunei’s first ESG strategy that is 100 per cent managed and maintained locally. “It’s a new and evolving strategy and a new evolving space where we are – ESG. So we are very proud that the team internally in Brunei is able to take on that responsibility, take on that challenge and manage it internally.”

“It’s an extremely important step in the development of Brunei into a premier Islamic financial hub, and it showcases BIBDS’ and BIBD AM’s commitment to both the Brunei Darussalam Central Bank (BDCB) Financial Sector Blueprint as well as Brunei Vision 2035.”

Looking ahead, Haji Muhammad Yazid highlighted that clients who invest with BIBDS and BIBD AM – be it retail investors via the Arabesque ESG Fund or institutional investors through the ESG Sukuk Strategy – can rest assured that their money will be invested in alignment with ESG values as well as Syariah principles.

On future plans, he shared that the focus is on spreading more awareness on ESG investment among investors in Brunei. “They don’t have to compromise on the returns in order to align themselves with the ESG values. That is something that we continue to push.”

This, he affirmed, is in line with the Brunei National Climate Change Policy and the pledge to reach Net Zero by 2050.

“Every little bit helps. Every man or woman on the street, every dollar that they want to invest in us, they can still make an impact, and at the same time they can still make financial returns.”

Haji Muhammad Yazid bin Dato Paduka Haji Mahadi
Jason Wong

Highlights

BIBD Securities’ ESG Journey

– Since May 2021, BIBD Securities has continued to advance its alignment with environmental, social and governance values.

– BIBD Securities, as an Islamic financial institution founded on and driven by Maqasid Syariah, in combination with ESG values, creates something that is unique.

– In September 2021, BIBD Asset Management became the first entity in Brunei to be a signatory of the United Nations Principles of Responsible Investing (UN PRI).

– The Arabesque Q3.17 SICAV -Global ESG Momentum Flexible Allocation fund, a new Syariah-compliant fund aligned with ESG values was launched on December 6, 2021 by BIBD Securities in partnership with Arabesque Asset Management.

– The fund has been well received, particularly among young and working investors.

– This month, BIBD Asset Management launched its ESG Sukuk Strategy, a homegrown investment strategy that is 100 per cent managed and maintained locally to invest in ESG Sukuk.

– Investments made through BIBD Securities and BIBD Asset Management will be aligned with ESG values as well as Syariah principles.

– The focus for the future is spreading more awareness on ESG investment among investors in Brunei.

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