CIMB Group Holdings Berhad (“CIMB” or “the Group”) has taken a significant step within the global banking industry by formalising its 2030 climate target for its palm oil sector portfolio focusing on sustainable palm oil production. Concurrently, the Group also continues to amplify its commitment to decarbonisation, establishing a target for its power portfolio, emphasising a transition towards cleaner, renewable energy sources. These commitments are an extension to last year’s milestone announcement of Net Zero targets for its thermal coal mining and cement portfolios in pursuit of achieving its overarching 2050 Net Zero commitments.
In line with these initiatives, the Group has also released a comprehensive whitepaper on its decarbonisation plans that meticulously outlines sector-specific pathways and immediate plans for the four key sectors that represent around half of the Group’s current emissions.
Dato’ Abdul Rahman Ahmad, Group Chief Executive Officer of CIMB Group said, “We are pleased to present a comprehensive strategy on these sectors, the first in Malaysia, solidifying our commitment towards Net Zero by 2050. We firmly advocate for the sustainable production of palm oil and recognise the crucial role that businesses, including the MSMEs play in advancing towards sustainable palm oil production. We will continue to actively support and enable our clients and small-scale growers to embrace and adopt certified sustainable palm oil standards. CIMB is also committed to support decarbonisation in the power sector, leveraging the rapid advancements in renewable energy technologies and supportive national schemes to accelerate the transition to a Net Zero economy.
To encourage the growth of sustainable palm oil, CIMB has set a goal to reduce emissions intensity of its entire palm oil portfolio by 16 per cent, from 1.81 in 2022 to 1.52 tCO2e/tCPO by 2030 – equivalent to a 2 per cent annual reduction on average. The decarbonisation target is set based on the Science-Based Targets Initiative (“SBTi”) and Forest, Land and Agriculture (“FLAG”) guidance. These include Scope 1 and 2 emissions, originating from plantation and milling clients, along with Scope 3 upstream emissions associated with clients’ sourcing of fresh fruit bunches from suppliers.
To that end, CIMB will engage with its clients to shift their production towards certified sustainable palm oil to minimise environmental impacts, adopt better agricultural practices to increase yields and reduce operational greenhouse gas (“GHG”) emissions as well as improve the quality and coverage of emissions reporting. CIMB’s Net Zero targets for this sector serve to complement its No Deforestation, No Peat, and No Exploitation (“NDPE”) commitment which was rolled out in 2022, where clients with new plantations are required to conduct a High Conservation Value (“HCV”) assessment and commit to the conservation of HCV and peat areas prior to land clearing. In addition, clients are also responsible to ensure that the rights of communities, smallholders, and workers are safeguarded. CIMB is the first bank globally to have announced a science-based Net Zero decarbonisation pathway for the Palm Oil sector. As part of the process, CIMB actively engaged with key industry stakeholders to ensure its plans are reflective of the collective need to move forward in this area.
Meanwhile, the power sector in ASEAN is still largely dependent on fossil fuels. A just energy transition will require the switch to low carbon and renewable alternatives while maintaining energy security and affordability. CIMB has set an interim Scope 1 emissions target for its power generation portfolio, in line with the International Energy Agency’s (“IEA”) 2023 Net Zero Roadmap reference scenario. The Group targets to reduce the emissions intensity of its power portfolio by 38 per cent, to meet an emissions intensity target of 272 kilogrammes of CO2 equivalent per megawatt hour generated (“kgCO2e/MWh”) by 2030, further building on its sustainability leadership in the region.
Southeast Asia’s abundance of renewable energy resources makes it well-suited for integrating a significant portion of clean energy into its power mix. CIMB is committed to work with its power clients to accelerate decarbonisation plans by proactively directing financing towards clean energy production.
“With sustainability being a key priority under our Forward23+ strategic plan, CIMB will continue to actively catalyse and drive the adoption of environmentally and socially responsible practices. We take our responsibility seriously and heed the respective governments’ direction to ensure a just transition as the ASEAN economies and our clients navigate this decarbonisation journey. In particular, CIMB will continue to support and grow our Palm Oil exposure in Malaysia and Indonesia given the many inherent strengths and efficiency of the crop. CIMB is pleased to have reached this important milestone of outlining specific interim 2030 targets for these critical industries and we will complete the other key sectors by early 2024. We also look forward to sharing our experiences and learn from others at the upcoming COP28,” added Dato’ Abdul Rahman Ahmad.
In 2021, CIMB was the first emerging market bank globally to commit to exiting coal in line with the goals of the Paris Agreement. Last year, CIMB set its target to halve its financing and investment exposure to the thermal coal mining sector by 2030 as an interim target for the Group’s longer-term commitment to phase out coal from its portfolios by 2040. CIMB also aims to reduce the physical intensity of financing clients in the cement sector by 36 per cent from 0.72 to 0.46 tonnes of CO2 equivalent per tonne of cement (“tCO2e/t cement”) by 2030.
CIMB is committed to continue providing its clients with a diverse range of sustainable finance solutions as guided by the Group’s Green, Social, Sustainable Impact Products and Services (“GSSIPS”) framework which serves an internal taxonomy for the Group to deliver impactful sustainable finance. Most recently at the CIMB Cooler Sustainability Summit 2023, the Group announced that it had more than tripled its sustainable finance target to RM100 billion by 2024, up from its RM30 billion target previously announced in 2021.
For more information and to access comprehensive information about CIMB’s target-setting methodologies and transition strategies for its palm oil, power, coal and cement sectors, please visit https://www.cimb.com/en/sustainability/sustainability-cimb.