Malaysian bank CIMB Group Holdings Berhad has on Wednesday announced its 2030 climate targets for its oil and gas and real estate portfolios.

The bank said in a statement that it has become the first Malaysian bank to complete its 2030 decarbonization target setting for high-emitting sectors in pursuit of its broader 2050 net zero commitments, that include thermal coal mining, cement, palm oil and power.

The bank has also updated its previously published whitepaper detailing its decarbonization plans, meticulously delineating sector-specific pathways and immediate strategies for all six sectors, which collectively accounts for 60 percent of the bank’s financing portfolio emissions as of 2023.

Gurdip Singh Sidhu, Chief Executive Officer of CIMB Malaysia and CIMB Bank Berhad, said the completion of CIMB’s 2030 decarbonization targets, marking a significant milestone toward realizing the firm’s long-term net zero target by 2050.

According to him, these interim targets demonstrate the bank’s accountability and reinforce its commitment to facilitating a just transition across ASEAN.

By breaking down the bank’s long-term goal into actionable and measurable milestones, he said the bank is 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,

“On top of that, our sector-specific decarbonization plans are carefully tailored to closely align with the respective government policies and directives of each country, demonstrating our dedication to advancing national objectives across the regions we operate in,” he added.

According to the statement, CIMB is committed to assisting its oil and gas clients as they decarbonize and shift towards renewable and low-carbon alternatives in their portfolios.

To that end, the bank aims to facilitate the transition by reducing financed emissions lending intensity (FELI) of its oil and gas portfolio by 16 percent by 2030.

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 decarbonization 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.

Concurrently, starting January 1, 2025, the group will 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.

This is especially crucial in reducing dependence on coal within the power sector and ensuring energy security through self-sufficiency in the short term.

The bank has also set a target to reduce the operational emissions intensity of its commercial real estate portfolio by 34 percent by 2030.

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

The selection of the reference scenario acknowledges that although CIMB’s real estate clients are able to control the pace at which they improve their energy efficiency, achieving these targets rely heavily on the decarbonization of the grid-power supply, whereby CIMB recognizes that its clients have limited influence.

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, the bank also supports decarbonization of the power grid through its net zero aligned Power sector target.

“While this is a significant milestone in our net zero journey, it is just the beginning,” said Luanne Sieh, Group Chief Sustainability Officer of CIMB Group.

“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,

“Collaboration is key, and we are working closely with our clients to drive impactful change and real economy decarbonization while safeguarding a just transition,” she added.

CIMB is committed in its efforts to provide clients with a diverse range of sustainable finance solutions as guided by the group’s Green, Social, Sustainable Impact Products and Services (GSSIPS) framework, an internal taxonomy set by the Group to deliver impactful sustainable finance.

Last year, the group announced that it had tripled its sustainable finance target to MYR 100 billion ($21.19 billion) by 2024, an increase from its MYR 30 billion ($6.36 billion) target previously announced in 2021.

As at December 2023, CIMB has recorded over MYR 80 billion ($16.95 billion) in sustainable finance, on track to achieving its MYR 100 billion ($21.29 billion) target, and will announce new plans in due course.

Most recently, CIMB marked another milestone through its election into the Net Zero Banking Alliance (NZBA) Steering Group.

The NZBA, led by industry and convened by the UN, is a coalition of global banks committed to financing the transition to net zero greenhouse gas emissions by 2050.

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