Ficus Capital (Ficus), a Malaysia-based venture capital firm, has in collaboration with INCEIF University, to launch an environmental social and government Islamic (ESG-i) assessment framework to empower micro, small and medium enterprises (MSMEs) in Malaysia with sustainable practices.

Ficus said in a statement on Thursday that the assessment framework incorporates Shariah principles and the Quadruple Bottom Line (QBL) concept—Planet, People, Profit, and Principle.

It features refined questions and a scoring methodology to evaluate sustainability practices along with a transitional tool to help MSMEs embrace sustainable practices comprehensively.

“It is natural for Islamic finance development to converge with ESG as Islamic Social Finance has been practiced by Islamic Banks and Islamic Financial Institutions in Malaysia,” said Deputy Minister of Religious Affairs of Malaysia Zulkifli Hasan.

“This robust ESG-i framework by Ficus and INCEIF is timely as it comes on the back of our Prime Minister Anwar Ibrahim’s recent announcement on the government commitment towards Islamic finance innovation via partnerships,

“Furthermore, it will be catalyst towards greater integration between Islamic Finance and ESG,” he added.

According to the statement, the ESG-i assessment framework was created in recognition of the vital role that MSMEs play in the global economy.

In Malaysia, MSMEs represent 97.2 percent 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

“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,” Ficus Capital Chairman Nor Azamin Salleh said.

“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.

He also said 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.,” he said.

According to the statement, Ficus developed this unique ESG-i assessment framework in-house and has been using it for several years.

Recognizing an industry need for this tool, Ficus has ventured into a partnership with INCEIF University, a world-leading Islamic finance university with vast industry expertise, to develop this robust and practicable framework for MSMEs.

The ESG-i assessment 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, Ficus said the ESG-i assessment framework helps Malaysian MSMEs better navigate these challenges by aligning with both local and international sustainability guidelines.

It said the assessment framework was piloted with a diverse group of MSMEs, demonstrating its real-world applicability and impact.

It also noted that feedback from key stakeholders, including regulators, practitioners, Shariah scholars, and academicians, was crucial in refining the framework.

According to the statement, 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 underscores the framework’s practicality and impact,

“It provides MSMEs with the necessary tools to integrate sustainability into their business practices effectively,” said Mohd Azmi Omar, President and Chief Executive Officer of INCEIF University.

Additionally, it said it empowers them to be resilient, competitive, and future-ready.

According to him, the framework aims to be a catalyst for change, promoting a sustainable supply chain and addressing the evolving sustainability landscape.

It is noted that the ESG-i assessment framework features refined questions and a scoring methodology to better assess MSMEs’ sustainability practices.

It aligns with existing domestic and international sustainability guidelines, providing MSMEs with a transitional tool to embrace sustainable practices comprehensively.

Ficus said it is a key tool for MSMEs to transition towards sustainable development within Malaysia’s dual financial system.

The practical, simplified, and Shariah-compliant approach to sustainability enables MSMEs to navigate the complex global sustainability landscape and contribute to a sustainable future, it added.

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