CIMB COMPLETES 2030 DECARBONISATION TARGET-SETTING FOR HIGH EMITTING SECTORS

KUALA LUMPUR, July 3 (Bernama) -- CIMB Group Holdings Bhd said it has become the first bank in Malaysia to complete its 2030 decarbonisation target-setting for high emitting sectors.

The banking group announced targets for its oil and gas (O&G) and real estate portfolios today as it pursues its broader 2050 Net Zero commitments that included targets for the thermal coal mining, cement, palm oil and power sectors.

CIMB Malaysia and CIMB Bank Bhd chief executive officer Gurdip Singh Sidhu said to assist the O&G sector decarbonise and shift towards renewable and low-carbon alternatives, the group aims to facilitate the transition by reducing the Financed Emissions Lending Intensity (FELI) of its O&G portfolios by 16 per cent by 2030 to 583 tonnes of carbon dioxide equivalent per million ringgit of financing (tCo2e/MYR mm) from 694 as of 2022. 

"This target encompasses Scope 1, 2 and 3 emissions originating from pure-play upstream exploration and production companies as well as integrated oil and gas players. 

"The decarbonisation target is set based on the International Energy Agency Net Zero Emissions by 2050 Scenario (IEA NZE), enhanced with insights from the International Energy Agency Sustainable Development Scenario (IEA SDS), to formulate a Net Zero scenario appropriate for the ASEAN context," he told a media briefing when announcing the targets today. 

Essentially, Scope 1 is direct emissions that are owned or controlled by a company, while Scope 2 and 3 indirect emissions are a consequence of the activities of the company but occur from sources not owned or controlled by it.

Concurrently, he said starting Jan 1, 2025, the group would also cease new financing specifically for new upstream oil fields approved for development post 2021. This aligns with the IEA NZE, which states that globally, no new oil and gas projects are necessary beyond those committed as of 2021, given current assets meet supply and demand. 

"However, acknowledging the pivotal role of natural gas as a transition fuel needed by ASEAN, CIMB will continue to support natural gas initiatives," said Gurdip. 

Meanwhile, he said the group has set a target to reduce the operational emissions intensity of its commercial real estate portfolio by 34 per cent by 2030 to 77 of physical emissions intensity from 117 as of 2022. 

This interim target, which comprises its real estate clients’ Scope 1 and 2 emissions is set in line with improvements in energy efficiency implied by the Carbon Risk Real Estate Monitor (CRREM) but adopts a power grid decarbonisation rate in line with the IEA Announced Pledges Scenario (APS) pathway.

"To meet this target, CIMB will actively seek to finance the development, retrofitting, and maintenance of more energy-efficient buildings including energy transitions in buildings through onsite renewable energy installations such as rooftop solar PV and energy storage. 

"Concurrently, CIMB also supports decarbonisation of the power grid through its Net Zero aligned Power sector target. In 2021, CIMB was the first bank amongst emerging markets globally to announce its commitment to exit coal by 2040, in line with the goals of the Paris Agreement,” he added.

Group chief sustainability officer Luanne Sieh said the banking group is now actively implementing strategic measures in existing business and risk processes, a comprehensive effort that it anticipates would span over the next two to three years, requiring extensive coordination across the bank. 

"Collaboration is key, and we are working closely with our clients to drive impactful change and real economy decarbonisation while safeguarding a just transition. On the other hand, we can’t disadvantage by making things worse for the vulnerable people who are not well off without any kind of helping mechanism in terms of the transition,” said Sieh. 

She also said the targets set by the group would need to be progressively updated for the next five years, in line with the changes in government regulations, customer readiness and advancement of technology. 

The group announced last year that it had tripled its sustainable finance target to RM100 billion by 2024, an increase from its RM30 billion target previously announced in 2021.  As of December 2023, CIMB has recorded over RM80 billion in sustainable finance, is on track to achieving its RM100 billion target, and will announce new plans in due course.

-- BERNAMA