This article first appeared in The Edge Malaysia Weekly on November 27, 2023 - December 3, 2023

For the second year running, Hong Leong Bank Bhd won gold in the financial services sector at The Edge Malaysia ESG Awards 2023. Its group managing director and CEO Kevin Lam says this is a testament to its unwavering commitment to upholding ESG principles.

Hong Leong has integrated ESG factors into its core business strategies, decision-making processes and investment criteria, says Lam, as well as maintained a long-term perspective in its ESG efforts by focusing on initiatives and investments that will create lasting positive impacts on the environment and society.

“We have actively sought partnerships with ESG-focused organisations, experts and non-governmental organisations. These collaborations have allowed us to tap a wealth of knowledge, stay updated on industry best practices and leverage our resources more effectively,” he says.

Having been on this sustainability journey for the past six years, Lam says one of the biggest challenges is the lack of consistent, reliable and comparable data across companies and industries.

Steady stakeholder support is needed to understand the importance of disclosure and use innovative technologies that would enable data-driven decisions, track progress and allow continuous refining of ESG strategies.

“The enhancement and introduction of the latest standards and requirements for sustainability data and initiatives reporting has made financial institutions emphasise accuracy, integrity and governance within our processes. With that, we automate and enhance our data capture and collection, and engage external parties to review our processes and provide assurance on the data that we report in our sustainability reporting,” he says.

At Hong Leong, Lam says, they believe ESG is a collective journey and a constant opportunity to learn from each other. With that in mind, the bank has set strategies, such as green and sustainable financing for businesses and retail customers, as the country looks to transition to a low-carbon economy. This includes renewable energy financing, green car financing and green building or township and affordable housing financing.

Under the HLB General Exclusion list, Lam says Hong Leong committed to exclude financing of any greenfield coal-fired power plants from July 1, 2021, and exclude new financing of all coal-fired power plants effective July 1, 2026.

A clear decarbonisation strategy is important, says Lam, with a focus on reducing the carbon footprint, not just for its operations but also its customers. “We plan to expand our carbon emissions assessments to include Scope 3 Category 15, covering investment and financed emissions of our corporate banking, project financing, mortgage financing and auto loan financing portfolios.

“To achieve this, we have become a signatory to the Partnership in Carbon Accounting Financials this year, as we step up our efforts to calculate our financing emissions along with the identification and assessment of physical risks of our collaterals and assets.”

The bank also set up a Business & Corporate Banking ESG Policy and Assessment Framework to take an inclusionary approach with its corporate, commercial and small and medium enterprise (SME) customers, with the aim to encourage them to transition to lower-carbon economic activities.

“We continue to engage and share knowledge with our customers, especially SMEs, through our HLB Sustainability Roundtables, in collaboration with SME associations such as the Small and Medium Enterprises Association,” says Lam.

Other initiatives include the developer end-financing policy to guide the bank’s assessment on development projects and encourage property developers to adopt greener practices; and the procurement policy, which guides the ESG assessment on its vendors across the bank’s entire value chain.

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