KUALA LUMPUR (Sept 24): Tenaga Nasional Bhd (KL:TENAGA), or TNB, has launched its inaugural Transition Finance Framework, outlining the utility giant’s plan to engage in sustainable finance transactions (SFTs) in the form of loans or sukuk, to fund projects that will deliver positive societal and environmental impacts in support of its decarbonisation and energy transition efforts.

Through this framework, TNB can utilise various financing instruments for its SFTs, which encompass sustainable and responsible investment (SRI), green, social and sustainability (GSS) and transition sukuk, GSS and transition bonds, as well as transition loans.

The proceeds can be allocated to several eligible categories including renewable energy projects, energy efficiency initiatives, affordable basic infrastructure and services, clean transportation projects that qualify under the transition category and low carbon power generation projects eligible under the social category.

“The framework provides transparency and disclosures in terms of the relevant governing and decision-making processes employed by TNB in undertaking SFTs taking into consideration relevant environmental and social risk management in accordance with available best market practices in support of TNB’s overall sustainability strategy and Energy Transition Plan, thereby promoting overall credibility of such transactions undertaken,” the group said in a filing with Bursa Malaysia.

Maybank Investment Bank Bhd served as the sustainability framework adviser for the development of the framework, while Sustainalytics was engaged by TNB to review and provide a second-party opinion on its alignment with relevant guidelines, principles, and standards, including the recommendations outlined in the International Capital Market Association’s Climate Transition Finance Handbook 2023.

The framework has received endorsement from Morningstar Sustainalytics, a globally recognised leader in environmental, social and governance risk, ratings and data for investors.

In 2021, TNB committed to achieving its net-zero emissions goal by 2050. This target is a key component of the group’s Sustainability Pathway 2050, a roadmap outlining its sustainability commitments, which subsequently paved the way for the Energy Transition Plan established in 2022.

At Tuesday’s noon break, shares of TNB gained 22 sen or 1.49% to RM14.96, giving the group a market capitalisation of RM85.68 billion.