Vital Roles of Value-Based Intermediation within Sustainable Finance Framework: A Theory Synthesis and Model Approaches

Sustainability has been discussed in four pillars, namely human, social, economic, and environmental.These pillars ensure that people meet their needs today without compromising the ability of future generations to meet theirs.Sustainable development, particularly finance, helps nations while addressing challenges in economic growth, social inclusion, and environmental protection.It plays a crucial role in achieving sustainability by directing funds into projects that support development and incorporating environmental, social, and governance (ESG) factors into business and investment decisions.This approach is designed to provide long-term benefits to clients and the broader society, which is aligned with the Bank Negara Malaysia (BNM) initiative introduced a fresh approach through the introduction of Value-Based Intermediation (VBI).VBI highlights a guide to a resilient, equitable recovery in Malaysia's economic and social systems.It enhances Islamic banks' offerings, providing impactful and rewarding services.VBI and sustainable finance prioritise ethical values and long-term benefits, ensuring development meets current needs without compromising future generations.Thus, this paper aims to discuss the strategy of VBI and its prospective implementation from a Shariah perspective, and the integration between the VBI and the sustainable finance towards the inclusion outcomes as a novel approach to achieving sustainable development.Furthermore, this paper examines how Islamic banks apply VBI in addressing the current financial challenge.This paper is essential for the industry in responding to the strategic paper issued by the BNM, which aims to maximise the benefits for the community and shareholders.