Green Halal: Game-Changer For Business Growth -- Alliance Islamic Bank

By Karina Imran

KUALA LUMPUR, Feb 12 (Bernama) -- The concept of “green halal”, despite being unfamiliar to many, plays a vital role in driving business growth by merging halal and sustainable practices, said Alliance Islamic Bank Bhd (AIS).

Chief executive officer Rizal IL-Ehzan Fadil Azim said the integration offers expanded business opportunities that balance profitability with purpose.

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He also emphasised that green halal helps businesses adapt to changing market demands that increasingly prioritise sustainability and good values.

“By aligning halal and sustainability practices, green halal enables businesses to build resilience, stay competitive, and meet the growing demand for products and services that are both halal and environmental, social and governance (ESG)-oriented,” he told Bernama. 

He noted that many businesses operate within the halal parameters but are unaware of the sustainability or ESG impact of their business. 

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“Similarly, there are ESG-oriented businesses that could do well to expand their appeal via the halal market.

“We want to promote the halal economy while ensuring the businesses are operating in a way that creates a positive impact on the economy, environment, and society,” he said. 

AIS Champions Green Halal through Tailored Programmes

Rizal IL-Ehzan said the bank is enabling the adoption of the green halal concept among small and medium enterprises (SMEs) through initiatives such as the “halal in one” (HiO) programme and the Islamic sustainability financing (ISF) programme.

He said the HiO programme is AIS’s flagship initiative, designed to help businesses venture into and succeed in the halal industry.

“It is built around three core components. The first component is ‘set up halal’, where we support SMEs at the start of their halal journey by guiding them through the halal certification process.

“The second component is ‘grow halal’, where we help them scale by expanding their market reach through business matching and market access propositions,” he said. 

He said that “fund halal” is the third key component of HiO, which offers shariah-compliant financing for certification, premise renovation, capital expenditures, and working capital.

Meanwhile, the ISF programme supports businesses transitioning to sustainable practices by offering three types of financing options, namely, solar financing, working capital financing for sustainable sectors and projects, and general working capital financing to support broader business needs while transitioning to sustainability. 

The Importance of Green Halal Financing

As sustainability becomes a global priority and with the growing interest in halal products, the government has taken steps to encourage this integration through initiatives like the greening halal businesses pilot programme, which supports halal businesses in adopting greener practices.

On many occasions, Prime Minister Datuk Seri Anwar Ibrahim reiterated the government's commitment towards innovation through partnerships and announced a commitment of RM100 million to seed more innovations in May 2024. 

Rizal IL-Ehzan explained that the green halal concept has a unique impact, as it intersects halal and sustainability, offering a strategic approach to creating positive benefits for businesses, the environment, and society. 

“This concept allows businesses to meet both halal and sustainability goals, appealing to a broader range of customers.

“It encourages innovation and long-term growth by aligning ethical and sustainable practices with business strategies,” he said.

He added that adopting green halal practices demonstrates a business’s readiness to propagate responsible business models and reflects its commitment to making a positive societal and environmental impact. 

Global Regulatory on Low-Carbon Practices

On the global front, the European Union’s Carbon Border Adjustment Mechanism (CBAM) will be rolled out by 2026. 

CBAM aims to reduce carbon emissions by imposing a carbon price on imported goods, thereby adding regulatory pressure on businesses to adopt low-carbon practices to remain competitive in international markets.

Similarly, and in response to CBAM, Malaysia’s commitment to implementing a carbon tax regime by 2026, as announced in Budget 2025, underscores the need for businesses to transition toward more sustainable business practices. 

This tax, targeting high-emission industries like iron, steel, and energy, reflects the increasing need for local businesses to adapt to evolving sustainability regulations and market demands.

“It is estimated that about 75 per cent of our exports to Europe will be impacted by CBAM.

“So, if the halal food manufacturer fails to address emissions issues, their ability to access the European market will be subject to taxes, making their products more expensive and less competitive,” he explained.

He stressed that Europe represents a significant market opportunity for halal food, given its growing demand and the increasing number of migrants.

However, he said businesses that fail to comply with CBAM regulations risk losing access to this market. 

“Adopting sustainable practices enables businesses to integrate into greener supply chains and access international markets with stringent environmental regulations.

“Therefore, halal and sustainability practices cannot be viewed in isolation, and they must be considered together as essential factors for business success," he added. 

Green Halal for SMEs and Companies

Rizal IL-Ehzan said the green halal concept is versatile and applicable to businesses of all sizes and industries, regardless of where they are in their halal compliance or sustainability journey.

He said green halal provides solutions for halal-certified businesses that go beyond shariah compliance by reducing waste, saving energy, and adopting eco-friendly materials.

These changes enhance competitiveness and prepare businesses for challenges like rising costs or environmental risks, he added.

For halal-certified companies targeting international markets, he said the concept helps them align with sustainability regulations, ensuring that they avoid tariffs, maintain access to international markets, and strengthen their position in global supply chains.

Beyond compliance, integrating halal and sustainability practices enhances brand reputation and fosters long-term relationships with environmentally conscious stakeholders, he said.

He stated that businesses already committed to sustainability but not yet halal-compliant could use green halal to expand into new markets like food, cosmetics, and logistics, where demand for halal products is surging.

According to the Halal Development Corporation, the halal market, fuelled by the growing demand for halal products, is now valued at over US$3 trillion (US$1=RM4.45) and is projected to reach US$5 trillion by 2030.

“This highlights its global appeal driven by strong ethical and sustainable attributes.

“Malaysia’s leadership in this sector reflects its continued innovation and dedication,” he said.

He stressed that with the rising affluence and purchasing power of the Muslim population, not just in Malaysia but across the world, there is a lot of emphasis on ensuring that whatever they consume and use is halal.

For companies new to halal and sustainability, green halal provides a practical and strategic way for businesses to begin integrating halal and sustainability practices into their operations. 

“It provides businesses with clear and simplified steps to incorporate ethical practices such as responsible sourcing, waste reduction and energy efficiency without overwhelming the businesses.

“This guidance makes it easier for the businesses to build towards compliance with halal standards and ESG goals,” he concluded. 

To learn more about Alliance Islamic Bank’s business solutions, visit www.alliancebank.com.my/Islamic/Business/Financing.

-- BERNAMA