Sarawak Energy Berhad (“Sarawak Energy”) has secured an RM100 million sustainability-linked loan (“SLL”) in the form of a revolving credit facility from CIMB Bank Berhad (“CIMB” or “the Bank”), making Sarawak Energy the first East Malaysian company, and the first utility company in Malaysia, to secure a loan linked to measurable sustainability performance targets (“SPTs”).
The announcement was made via a virtual SLL acceptance ceremony during a Fireside Chat session with Sarawak Energy on “Creating a Sustainable Business Model that Works”, in conjunction with CIMB’s The Cooler Earth Sustainability Summit 2020.
Amar Abdul Hamed Sepawi, Chairman of Sarawak Energy, said, “ Through a more strategic approach to sustainability, we are creating value for all our stakeholders by managing long-term risks and opportunities. This sustainability-linked loan, validates our efforts in sustainability – not only is it good for the environment, it is also good for business.”
Commenting on the achievement, Sharbini Suhaili, Group Chief Executive Officer of Sarawak Energy further said, “We recognise the importance of sustainable financing and this is part of our efforts in sustainable management and embedding sustainable financing into our funding strategies to improve our Environmental, Social and Governance (“ESG”) performance.”
Sarawak Energy is also the first Malaysian company to become a signatory of the ‘Business Ambition for 1.5°Celsius’, a joint initiative led by the Science Based Targets initiative in partnership with the United Nations Global Compact and the We Mean Business coalition, which requires signatories to set science-based emissions reduction targets aligned with limiting global temperature rise to 1.5°C and reaching net-zero emissions by 2050.
Abdul Rahman Ahmad, Group Chief Executive Officer, CIMB Group said, “This SLL is a testament to our commitment, in this case by incorporating environmental and social considerations into financing terms to incentivise and drive sustainable corporate behaviour. Our SLL offering has been well received since we first introduced it earlier this year, and we hope to be able to announce more SLLs as well as more positive impact products and services for our clients in the near future.”
The SLL is based upon sustainability performance targets (“SPTs”) aimed at improving the environmental and social performance of Sarawak Energy from FY2020 to FY2023, and serves as a reminder for Sarawak Energy to keep its grid emission intensity in alignment with the Paris Agreement and the renewable energy developer’s pledge to ‘Business Ambition for 1.5°Celsius’. It also keeps Sarawak Energy on track in its goal to fully electrify Sarawak by 2025.
CIMB will grant a rebate against the loan interest if these pre-agreed SPTs are met. Sarawak Energy intends to use the interest rebates received from CIMB for its youth education sustainability programmes, as a way of giving back to the community.
CIMB is the first ASEAN banking group to become a founding signatory of the United Nations Environment Programme Finance Initiative (“UNEP FI”) Principles for Responsible Banking, and a signatory of the Collective Commitment on Climate Action.
Earlier this year, CIMB was one of the first banks in Malaysia to announce the SLL incentive, having committed RM3 billion to SLLs, and the Bank has been proactively presenting the offering to clients.