KUALA LUMPUR: CIMB Group Holdings Bhd has raised its commitment to supporting Asean's transition to a low-carbon economy, marking significant strides toward its sustainability objectives.
Hong Leong Investment Bank Bhd (HLIB Research) affirms CIMB's pioneering role in environmental, social, and governance (ESG) initiatives through this enhanced effort.
"We continue to like CIMB's sustainability initiatives, and we are also impressed with its strong progressions.
"Hence, we reckon the bank will remain as one of our top scorers in the next ESG banking review," it said in a note.
Last Wednesday, CIMB, which is majority-owned by Khazanah Nasional Bhd, became the first among local banks to outline its 2030 decarbonisation targets for high carbon-emitting sectors.
According to HLIB Research, CIMB is progressing well on its 2024 sustainability commitments.
The bank aims to mobilise RM100 billion in sustainable finance (2021-2023: RM86.2 billion achieved).
Their corporate social responsibility (CSR) targets include RM150 million over five years and 100,000 hours of staff volunteer activities annually.
As of Dec 2023, they have achieved RM96 million and 203,000 hours, meeting 64 per cent and 203 per cent of their targets, respectively.
They also plan to achieve net zero operational greenhouse gas (GHG) scope 1 and 2 emissions by 2030 (as of Dec 2023: emissions are 35 per cent and 26 per cent lower compared to the 2019 baseline).
Additionally, the bank aims for net zero greenhouse gases (GHG) scope 3 emissions by 2050, having established interim climate targets and high-level transition plans for six sectors, with real estate and, oil and gas (O&G) segments added this year.
Meanwhile, considering that scope 3 GHG financed emissions make up 99.7 per cent of CIMB's total emissions, this is a key focus area.
The bank has set 2030 climate targets for sectors covering 60 per cent of its total financed emissions and 47 per cent of its portfolio exposure.
To decarbonise scope 3 emissions, CIMB will integrate net zero targets into business planning, develop and improve credit-climate risk assessments, engage more with clients, enhance data quality and coverage, and build staff capability.
For scope 1 and 2 emissions, CIMB's main strategies include participating in the Corporate Green Power Programme/Virtual Power Purchase Agreement and purchasing unbundled renewable energy certificates.
In the area of biodiversity, CIMB has developed a process to assess risk in the projects and clients that they finance.
In 2024, it will be looking to formulate a biodiversity strategy and roadmap.
As for human rights, the bank will be enhancing its grievance mechanism to include communities.
Separately, for financial inclusion, it looks to innovate existing financial products (like lowering the minimum threshold to purchase unit trust, insurance, and FD placement), along with increasing awareness to cater to the vulnerable group.
Lastly, the bank has launched sustainability-linked financing for small and medium enterprises (SMEs) late last year, with milestone interest rebates of up to 50 basis points.
Overall, HLIB Research has maintained a "hold" call on CIMB, with a target price of RM6.60.