INCEIF UNIVERSITY

INCEIF University & Ficus Capital launch ESG-i framework to empower MSMEs

Deputy Minister of Religious Affairs Dr Zulkifli Hasan (in red shirt) with speakers and panellists at the launch, posing with a copy of the abridged ESG-I Framework.

Kuala Lumpur, 30 May 2024 –INCEIF University, in collaboration with the world’s first ESG-i venture capital firm Ficus Capital, launched the environmental, social, and governance Islamic (ESG-i) Assessment Framework to empower micro, small and medium enterprises (MSMEs) in Malaysia with sustainable practices.

The initiative is also in recognition of the vital role that MSMEs play in the global economy. In Malaysia, MSMEs represent 97.2 per cent of business establishments, contributing significantly to Gross Domestic Product (GDP), employment, and exports. However, they often lack the resources to implement sustainable practices.

By simplifying complex sustainability criteria, the ESG-i Assessment Framework provides practical tools for MSMEs to help them transition to a Low Carbon, Circular, and Resilient (LCCR) future. Through this, MSMEs can mitigate risks, unlock new markets, and enhance their financial performance. Ultimately, the framework aims to be a catalyst for change, promoting a sustainable supply chain and addressing the evolving sustainability landscape.

President & CEO Professor Emeritus Dato’ Dr Azmi Omar said the assessment framework incorporates Shariah principles and the quadruple bottom-line (QBL) concept – Planet, People, Profit, and Principle.

“It is a holistic approach that marries global ESG standards with the timeless principles of Islamic finance. Within this framework, we meticulously considered the Maqasid al-Shariah — the noble objectives of shariah, ensuring that our efforts extend beyond Islamic financial institutions to benefit MSMEs and companies,” Dato’Azmi said the launch of the framework which was officiated by Deputy Minister of Religious Affairs Dr Zulkifli Hasan.

In his speech, Dr Zulkifli said the ESG-I framework was designed to guide local businesses, especially start-ups and MSMEs, to comply with the objectives of Maqasid Shariah and ethical investment standards.

“What is interesting about this newly launched ESG-I framework is that it uses the Maqasid Shariah framework, which aims for protection or preservation in terms of intellect, self, property, religion, and so on. I think this is the best approach and can attract many investors,” the Deputy Minister added.

The launch of the ESG-i Assessment Framework was held at the Global Forum on Islamic Economic and Finance (GFIEF), organised by Bank Negara Malaysia under the patronage of the Ministry of Finance Malaysia.

A simple yet inclusive blueprint for assessing sustainability, the assessment framework incorporates Shariah principles and the QBL concept. It features refined questions and a scoring methodology to evaluate sustainability practices along with a transitional tool to help MSMEs embrace sustainable practices comprehensively.

Ficus Capital Chairman Nor Azamin Salleh, said: “The ESG-i Framework offers a practical solution to help MSMEs integrate sustainability into their operations, ensuring they remain competitive and resilient. This aligns with our commitment to supporting companies that operate according to ESG-i principles.

“When companies seek our assessment, they must undertake the ESG-i framework evaluation. Beyond financial metrics, we delve into environmental practices, social impact, and corporate governance. Our standards align with global expectations,” he added.

The launch of the ESG-i Assessment Framework comes at a crucial time. As global sustainability standards evolve, it is imperative for Malaysian MSMEs to adopt practices that keep them competitive and resilient, while fulfilling Islamic finance principles.

As a pioneer in ESG-i venture capital, Ficus developed this unique ESG-i assessment framework in-house and has been using it for several years. Recognising an industry need for this tool, Ficus ventured into a partnership with INCEIF University to develop this robust and practicable framework for MSMEs.

The framework provides a user-friendly tool for MSMEs to understand and implement sustainability practices. It incorporates Shariah principles and QBL concepts, ensuring it is relevant to Halal MSMEs in Malaysia.

The framework’s objectives and approach are designed to support MSMEs in their sustainability journey, offering a structured pathway to integrate ESG factors into their operations. With a global economic landscape increasingly influenced by climate change, technological disruption, and socio-economic inequalities, the framework helps Malaysian MSMEs better navigate these challenges by aligning with both local and international sustainability guidelines.

The Assessment Framework was piloted with a diverse group of MSMEs, demonstrating its real-world applicability and impact. Feedback from key stakeholders, including regulators, practitioners, Shariah scholars, and academicians, was crucial in refining the framework.

The pilot phase highlighted the need for targeted support and the framework’s potential to drive significant improvements in sustainability practices among MSMEs. The positive response from the pilot phase underscored the framework’s practicality and impact. It provides MSMEs with the necessary tools to integrate sustainability into their business practices effectively. Additionally, it empowers them to be resilient, competitive, and future-ready.

INCEIF was one of the Knowledge Partners of GFIEF. Themed ‘Shaping a Resilient Global Islamic Economy Through Values-based Reforms’, GFIEF gathered over 1,000 policymakers, business leaders, and financial service providers from all around the world to engage in discussion and collaborate to build a future where Islamic economics and finance could play a pivotal role in fostering shared prosperity and equity.

INCEIF also held pre and post GFIEF events throughout the week:

Masterclass on `Advancing Financial Inclusion through Islamic Social Finance’ by Associate Dean Prof Dr Aishath Muneeza where 47 participants explored how Islamic Social Finance promotes inclusive economic growth and addresses financial exclusion.
Roundtable Discussions on the Future Economy hosted by INCEIF and International Islamic University Malaysia brought together scholars, policymakers, and practitioners to evaluate and innovate educational and healthcare frameworks through Islamic Economics and Finance, with the aim to address economic complexities and global challenges.
Launch of Dr Yusuf Al-Qaradawi’s English translated book “The Role of Values and Ethics in the Islamic Economy” by Minister of Finance II Datuk Seri Amir Hamzah Azizan, followed by the book’s review forum.

The launch was reported in:

End.