KUALA LUMPUR: CIMB Group Holdings Bhd has doubled its sustainable finance target to RM60 billion by 2024 under its Green, Social, Sustainable Impact Products and Services (GSSIPS) Framework.
CIMB group chief executive officer Datuk Abdul Rahman Ahmad said the company had strengthened its sustainability commitment as it had already mobilised its earlier announced target of RM30 billion, two years ahead of plan.
"Some notable transactions include facilitating the government of Malaysia's dual-tranche US$1.3 billion sukuk wakala offering, where the US$800 million sustainability tranche was the world's first US Dollar sustainability sukuk offered by a sovereign.
"We also mobilised RM1.2 billion worth of sustainability-linked financing for corporate clients across the region since its launch in 2020 and continue to develop a healthy pipeline," he said in his welcome remarks at CIMB's Cooler Earth Sustainability Summit 2022.
As part of its plans to deliver on its new target, he said CIMB recently launched for the business community the first Sustainable Term Investment Account-i (TIA-i) in ASEAN, which is a low-risk, purpose-driven investment that supports Sustainable Development Goals (SDG).
The TIA-i placements will be invested in a Shariah-compliant investment portfolio, namely financing assets, following the investment's objective that is aligned to SDG8, which promotes decent work and economic growth for micro, small and medium-sized enterprises.
"To support our clients to transition towards a low carbon world requires us to work with partners to offer innovative solutions.
"I am pleased to announce a memorandum of understanding between CIMB and YTL-SV Carbon to collaborate on carbon-related projects and services to provide clients with a comprehensive solution and financing for carbon emissions-reducing projects," said Abdul Rahman.
He said the next decade, from 2020 to 2030, will be critical for climate action as countries and companies develop credible trajectories towards being net zero by 2050.
He said that the transition to net zero is expected to be the biggest economic and societal transformation since the Industrial Revolution.
He added that as of 2020, the group's financed emissions stood at 9,200 kilo tonnes of carbon dioxide equivalent, covering 40 per cent of its gross loan portfolio.
"For the next year, we intend to augment and expand the scope of our baseline to cover the other main operating markets, sectors and asset classes," he added.
Meanwhile, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said an immediate shift to a greener economy would lead to job displacement, negatively impacting the labour market.
He cited Petroliam Nasional Bhd (Petronas) and Tenaga Nasional Bhd (TNB) as examples where many employees may lose their jobs if the companies do not take gradual transitionary measures towards sustainability.
"Petronas employs close to 50,000 workers worldwide, where most are involved in upstream and downstream oil and gas businesses.
"So transitioning or changing their business model entirely to solar or hydrogen, for example, without any gradual approach, will displace many workers.
"This does not include the full ecosystem, and 4000 vendors and suppliers employ their own workers. This will lead to a negative spillover impact on the economy and the local communities, which they are based in, and of course, the industries as well," he said during the ministerial panel discussion at the summit.
As for TNB, he noted the company has close to 40,000 employees, most of whom are involved in the power generation business that originates from coal.
To mitigate the unfavourable social economics of the transition, the minister stated that the government must implement just transition policies for affected populations.
"There is a need to keep jobs in areas where coal production or hydrocarbons are concentrated.
"It is critical to conduct social dialogue among governments, workers and employers organisation at all levels to ensure that we look at agenda concerning social protection, recovery and skills development," he said.