ESG OFFERS HUGE OPPORTUNITIES FOR BANKING SECTOR - HSBC MALAYSIA CEO

KUALA LUMPUR, Sept 21 -- Environmental, social and governance (ESG) matters are highly relevant for the banking sector because climate change represents massive opportunities and can help the banks to build back better post-COVID-19 crisis.

HSBC Bank Malaysia Bhd chief executive officer (CEO) Stuart Milne said COVID-19 has shown that nature-based risks are very real and, in fact, can be existential.

“The damage in lost lives and impaired livelihoods as well as life chances have been so visible and tangible over the last 18 months, and we will be counting the costs for years to come.

“The challenge of climate change, on the other hand, is more severe. It's been difficult actually to capture the urgency politically and in broader society to respond to the challenge,” he said during a virtual session called “CEO Forum -- The Future of Banking: What Will Banks Look Like in the New Normal” at the 2021 Malaysian Banking and Finance Summit.

He noted that according to the Intergovernmental Panel on Climate Change, the global surface temperature will continue to increase and will pass 1.5 degrees Celsius and two degrees Celsius by 2030 unless deep reductions in emissions occurred.

Extreme weather and natural disasters, accelerating biodiversity loss and economic instability are already happening today, he added.

“And Asia has the biggest financing gap. The total regional investment need is around US$66 trillion (US$1=RM4.19) over three decades to limit temperature rise to 1.5 degrees Celsius. So what is the opportunity here for banks?” he said.

Milne said clearly the most significant contribution a bank can make is to support its customers to decarbonise.

“This is a matter of resilience and prosperity, and with such a large investment need, we have a big opportunity to drive growth in our lending books.

“At HSBC, we're prioritising financing and investment to support our customers transition to net-zero. Hence, we've pledged to reach this across our portfolio by 2050 or sooner,” he added.

He said HSBC has committed up to US$1 trillion of financing and investment by 2030 to help customers switch to more sustainable ways of doing business.

“Here in Malaysia, our Islamic banking subsidiary is on a path to become HSBC Group's first sustainable banking entity by the end of next year, with more than 50 per cent of its loan portfolio being ESG-compliant.

“Environment is one area where if we're not part of the solution, we're going to be seen as part of the problem. But more than that, it can be a significant driver of future profits to those that get it right, both for our customers and for us as banks,” he said.

-- BERNAMA