KUALA LUMPUR (July 3): CIMB Group Holdings Bhd (KL:CIMB) announced climate targets for the oil and gas (O&G) and real estate sectors on Wednesday, which completes its 2030 decarbonisation target-setting exercise for six high-emitting sectors in its portfolio.
The climate target for the O&G sector includes ceasing new financing specifically for new upstream oil fields approved for development post 2021, which is aligned with the International Energy Agency’s (IEA) Net Zero Emissions (NZE) by 2050 Scenario (NZE 2050).
These targets will support the bank’s efforts to reach its 2050 net zero commitment. Sector-specific pathways and decarbonisation strategies for the six sectors — including thermal coal mining, cement, palm oil and power — that accounts for 60% of the bank’s financing portfolio emissions in 2023, were also published in an updated whitepaper on Wednesday.
CIMB said it is the first Malaysian bank to complete the decarbonisation target setting for the six high-emitting sectors in Malaysia.
“By breaking down our long-term goal into actionable and measurable milestones, we are paving the way for tangible progress. While we implement proactive measures to address climate risks in our portfolio and promote sustainable finance practices, CIMB remains committed to support and empower our clients in transitioning to more sustainable business practices,” Gurdip Singh Sidhu, chief executive officer (CEO) of CIMB Malaysia and CIMB Bank Bhd, who also oversees the group's sustainability efforts, said at the CIMB Sustainability Roundtable 2024 on Wednesday.
CIMB aims to reduce the financed emissions lending intensity of its O&G portfolio by 16% by 2030, encompassing Scope 1, 2 and 3 emissions from pure-play upstream exploration and production companies, as well as integrated O&G players. The target is set based on IEA’s NZE 2050 and IEA’s Sustainable Development Scenario.
The decision to cease financing of new upstream oil fields is aligned with NZE 2050, said the bank, which states that no new O&G projects are necessary, beyond those committed as of 2021. However, the bank will still finance natural gas initiatives, as it is seen as a transition fuel.
On the other hand, CIMB targets to reduce the operational emissions intensity of its commercial real estate portfolio by 34% by 2030, which comprises its real estate clients’ Scope 1 and 2 emissions. The target is set in line with energy efficiency improvements implied by the Carbon Risk Real Estate Monitor, and adopts a power grid decarbonisation rate, in line with IEA’s Announced Pledges Scenario pathway.
CIMB will actively seek to finance the development, retrofitting and maintenance of more energy-efficient buildings to meet this target. Other activities include supporting renewable energy installations, such as rooftop solar photovoltaic panels and energy storage.
“While this is a significant milestone in our net zero journey, it is just the beginning. We are now actively implementing strategic measures into existing business and risk processes, a comprehensive effort that we anticipate will span over the next two- to three years, requiring extensive coordination across the bank,” said Luanne Sieh, group chief sustainability officer of CIMB Group, at the roundtable.
As at December 2023, the bank recorded over RM80 billion in sustainable finance, and is confident of achieving its RM100 billion target by 2024. Most of the sustainable finance is in the green and sustainability-linked categories.
The bank also said it is on track in reducing emissions intensity for the coal and cement sectors, for which the climate targets were announced in September 2022.
While these initiatives will change CIMB’s financing portfolio over the years, it will not result in negative growth for the bank, said Gurdip during the media roundtable. This is because the countries that CIMB operates in are developing and growing economies, for which demand for finance will continue to rise.
Additionally, the bank is closely engaging clients in these sectors to formulate realistic targets and plans, he said. Many of these clients are already being pushed to decarbonise by different stakeholders.
“We are positive that not only will we not see an impact on our own growth, we think that our clients who are starting to respond and prepare [for these trends] will be largely insulated, as we work with them to facilitate this transition,” he added.