CIMB Group Holdings Berhad will has introduced its first Coal Sector Guide. The bank becomes the first banking group in Malaysia and the first in Southeast Asia to commit to phasing out coal from its portfolio.
Effective in phases next year, the bank’s latest sustainability milestone will phase out coal from its portfolio by 2040, as part of its effort to align with the 1.5 degree Celsius goal of the Paris Climate Agreement.
The guide, effective in phases next year will be applicable across the Group in all its operating markets and prohibits asset-level or general corporate financing for new thermal coal mines and coal-fired power plants, as well as expansions, except where there is an existing commitment.
his move is in support of Bank Negara Malaysia’s agenda to build climate resilience within the Malaysian financial sector and its work around the Joint Committee on Climate Change (“JC3”), the Value-based Intermediation Financing and Investment Impact Assessment Framework (“VBIAF”) and the forthcoming Climate Change and Principles-based Taxonomy.
“As a founding member of the United Nations Environment Programme Finance Initiative (“UNEP FI”) Principles for Responsible Banking and in line with the Collective Commitment to Climate Action (“CCCA”), CIMB firmly believes that profit and purpose are inextricably linked. As such, we are working towards announcing more sustainability-related measures, in 2 particular with respect to our positive impact financing target, as we continue to address climate change and the other pressing issues facing society today,” Mohd Nasir Ahmad, Chairman of CIMB Group said.
“The release of the Guide is a milestone that represents our continuous progress on the sustainable financing front. Our sector guides and positive impact finance agenda help us to take a more holistic approach to decision-making, incorporating economic, environmental and social (“EES”) considerations. This will also support governments across the region in their efforts to increase the share of renewable energy in their energy sector blueprints, taking into account each country’s specific needs and developmental agenda,” he added.
CIMB will intensify its efforts to support and incentivise existing and new clients, including those that are operating in the brown sectors, to transition towards a low-carbon, climateresilient economy.
The bank will also continue to focus on its engagements with energy clients, 3 governments, and other stakeholders, to support their energy and electrification plans, with a focus on cleaner forms of energy, through our financial services.
“CIMB’s announcement today is a very important milestone in the global efforts to align with the Paris Agreement and manage the growing financial risks of climate change. CIMB represents the first globally significant financial institution in the developing world to commit to a coal exit strategy as a core part of the wider effort to align with its sustainable profit objectives,” Tim Buckley, Director of Energy Finance Studies, IEEFA said.
Commenting on the announcement, Sophia Lim, CEO and Executive Director, WWF-Malaysia said, “It is encouraging to see financial policymakers and regulators being proactive in setting the direction for sustainable finance in the country. Banks are progressively increasing their commitments to global standards and initiatives such as the UN Principles for Responsible Banking and this is definitely a good sign for sustainability. It is also reassuring to know that science-based civil societies are playing instrumental roles in advocating for best practices in sustainable finance.”