Tengku Datuk Seri Zafrul Aziz (File piix)
An exclusive report by Farhana Poniman & Zairina Zainudin
KUALA LUMPUR, Oct 9 -- Malaysian banks are taking up Bank Negara Malaysia’s challenge to combat climate change with the adoption of a responsible lending policy as well as educating their retail and business banking customers on sustainability.
One of Asia’s largest investment banks, CIMB Group Holdings Bhd, said it has launched various sustainability-linked loans within the last 12 months, as well as issued a bond worth RM2.85 billion to fund projects related to the United Nations' Sustainable Development Goals (SDGs), after setting up its Sustainability Department in October last year.
CIMB has also joined a coalition of 130 global banks with a combined asset of over US$47 trillion to commit to align their business with the SDGs and the Paris Agreement on Climate Change.
“We have also put in place two group-wide policies - one on overall sustainability policy, while the other is on looking at environmental and social risks in our business lending,” group chief executive officer Tengku Datuk Seri Zafrul Aziz told Bernama.
On the retail banking front, he said CIMB would provide a reduced interest rate for clients who purchase more energy-efficient cars and houses to encourage them to make more sustainable decisions.
On the business banking front, the bank is actively talking to clients about sustainability-linked loans, where it would give clients a tiered discount if they meet pre-agreed sustainability targets on an annual basis.
Meanwhile, Malayan Banking Bhd (Maybank) established a Responsible Lending Guideline in 2015 to manage environmental, social and governance (ESG) risks, which was later expanded into a more comprehensive ESG Risk Management Framework and subsequently endorsed as a company policy in 2018.
Group president/chief executive officer Datuk Abdul Farid Alias said the policy has been integrated into the bank's day-to-day decisions in relation to financing practices.
“Following this, we have developed Risk Acceptance Criteria (RAC) for identified high ESG risk such as Oil Palm, Forestry & Logging, Oil & Gas and Mining & Quarrying. More RACs will progressively come on-stream, further strengthening our commitment to responsible lending.
“Not only do we monitor our clients’ practices, but we also inform them that we will only lend our support to those who are in the process of implementing or have already adopted sustainable practices,” he added.