KUALA LUMPUR: CIMB Group Holdings Bhd has set a goal to reduce the intensity of emissions in its entire palm oil portfolio by 16 per cent, from 1.81 in 2022 to 1.52 tonnes of carbon dioxide equivalent, or tCO2e/tCPO, by 2030.
This reduction is equivalent to a two per cent annual average reduction.
The decarbonisation target is based on the Science-Based Targets Initiative (SBTi) and Forest, Land, and Agriculture (FLAG) guidance.
These targets encompass Scope 1 and 2 emissions originating from plantation and milling clients, along with Scope 3 upstream emissions associated with clients' sourcing of fresh fruit bunches from suppliers.
Group chief executive officer Datuk Abdul Rahman Ahmad said the bank is pleased to present a comprehensive strategy on these sectors, the first in Malaysia, solidifying its commitment towards Net Zero by 2050.
"We firmly advocate for the sustainable production of palm oil and recognise the crucial role that businesses, including micro, small, and medium enterprises (MSMEs), play in advancing sustainable palm oil production.
"We will continue to actively support and enable our clients and small-scale growers to embrace and adopt certified sustainable palm oil standards.
"CIMB is also committed to supporting decarbonisation in the power sector, leveraging the rapid advancements in renewable energy technologies, and supporting national schemes to accelerate the transition to a net-zero economy," he said in a statement.
The bank said it will also engage with its clients to shift their production towards certified sustainable palm oil, minimising environmental impacts. This involves adopting better agricultural practices to increase yields, reducing operational greenhouse gas (GHG) emissions, and improving the quality and coverage of emissions reporting.
Additionally, the bank has set an interim Scope 1 emissions target for its power generation portfolio, aligning with the International Energy Agency's (IEA) 2023 Net Zero Roadmap reference scenario.
The target is to reduce the emissions intensity of its power portfolio by 38 percent, aiming to achieve an emissions intensity target of 272 kilograms of carbon dioxide equivalent per megawatt-hour generated (kgCO2e/MWh) by 2030. This effort further solidifies its sustainability leadership in the region.
Abdul Rahman said that with sustainability being a key priority under the bank's Forward23+ strategic plan, CIMB will actively catalyse and drive the adoption of environmentally and socially responsible practices.
He added that the bank takes its responsibility seriously and follows the respective governments' directions to ensure a just transition as the ASEAN economies and its clients navigate this decarbonisation journey.
"In particular, CIMB will continue to support and grow our palm oil exposure in Malaysia and Indonesia, given the many inherent strengths and efficiency of the crop.
"CIMB is pleased to have reached this important milestone of outlining specific interim 2030 targets for these critical industries, and we will complete the other key sectors by early 2024.
"We also look forward to sharing our experiences and learning from others at the upcoming 2023 United Nations Climate Change Conference (COP28)," he noted.
In 2021, CIMB was the first emerging market bank globally to commit to exiting coal in line with the goals of the Paris Agreement.
Last year, CIMB set its target to halve its financing and investment exposure to the thermal coal mining sector by 2030 as an interim target for the group's longer-term commitment to phase out coal from its portfolios by 2040.
CIMB also aims to reduce the physical intensity of financing clients in the cement sector by 36 per cent from 0.72 to 0.46 tonnes of CO2 equivalent per tonne of cement (tCO2e/t cement) by 2030.