CIMB announces US$666mil Sustainability-Linked Financing programme

• Supported by Malaysian Green Technology and Climate Change Corp
• Incentivises SMEs to reduce emission targets through financing rebates

CIMB Bank Bhd and CIMB Islamic Bank Bhd announced the launch of Sustainability-Linked Financing (SLF) for small and medium enterprises (SMEs) as a part of its GreenBizReady proposition. With an allocation of US$666 million (RM3 billion) through 2030, CIMB is the first bank in the market to offer SMEs value propositions for sustainability-linked financing, including simple tools for measurement and verification.

The SLF incentivises SMEs to attain credible greenhouse gas (GHG) emission reduction targets through financing rebates of up to 0.50% per annum. Once sustainability performance targets have been agreed with CIMB, SMEs will need to use a web-based tool to share data such as energy and fuel consumption with the Malaysian Green Technology and Climate Change Corporation's (MGTC) Low Carbon Operating System (LCOS) platform. By combining the SLF with Bank Negara Malaysia's (BNM) Low Carbon Transition Facility (LCTF), SMEs can also get better financing rates.

As part of the SLF launch, CIMB signed a Memorandum of Cooperation (MoC) with MGTC. Both parties have commited to driving sustainability adoption among SMEs. The signing was witnessed by Nik Nazmi Nik Ahmad, Minister of Natural Resources, Environment and Climate Change.

The SLF Programme is the latest extension of CIMB's award-winning GreenBizReady proposition launched in 2021 as a complimentary one-stop sustainability solution for SMEs. Through GreenBizReady, CIMB helps SMEs to achieve their sustainability targets through training and advisory services, as well as matching them with suppliers and associates.

"Sustainable economic growth is contingent upon our ability to ensure that our businesses—big or small—can adapt as we transition to a resilient, low-carbon economy in combatting the impacts of climate change," said Nik Nazmi. "By leveraging public-private partnerships (PPP) and public-private-philanthropic partnerships (PPPP) as part of a whole-of-society approach, we can ensure that Malaysian businesses thrive in tomorrow's economy. This, in turn, will be crucial to create a more inclusive and equitable Malaysia, which is also a worthy goal in and of itself," he added.

"This initiative by CIMB, in cooperation with MGTC, marks one such effort towards ensuring the resilience and competitiveness of our SMEs. Indeed, it is encouraging to see that a financial institution such as CIMB is taking steps to incentivise SMEs to reduce their GHG emissions and provide training and advisory services to get them started on their journey. This will certainly catalyse the transition of our local SMEs towards the green economy," Nik Nazmi said.

Ahmad Shazli Kamarulzaman, Deputy CEO of Group Commercial Banking, CIMB Group, said, "Our SLF offering for SMEs is in line with Malaysia's Net Zero ambitions and CIMB Group's target to achieve Net Zero GHG emissions by 2050, including Scope Three financed emissions."

Meanwhile, Shamsul Bahar Mohd Nor, MGTC CEO said, "With the incentives and support offered by CIMB, we invite businesses to adopt LCOS to achieve their sustainability goals and as a strategic advantage in positioning themselves at the forefront of Malaysia's sustainable business landscape. We aspire to make carbon management accessible and affordable to industries as they strive to support Malaysia's ambitious Net Zero 2050 target."

According to Shamsul, through LCOS, MGTC envisions a greener, more resilient country, where businesses, communities, and policymakers work hand in hand to create a legacy of environmental stewardship, leaving a lasting impact for generations to come.

SLFs are a popular transition finance mechanism but are usually highly bespoke and costly due to verification requirements to meet global standards. CIMB's SLF Programme helps SMEs overcome these long-standing challenges of measurement and verification of sustainability targets holistically and cost-effectively, providing access to incentives that have generally only been available to corporates. The SLF also aligns with the globally recognised Loan Market Association's Sustainability-Linked Loan Principles.

Besides reducing negative environmental impact, the programme aims to ensure SMEs' business resilience and continued access to export markets by improving their sustainability performance. This will help them to adapt to rapid market and regulatory developments such as the EU Carbon Border Adjustment Mechanism, upcoming local regulations and the transition towards sustainable supply chains within the global economy.

CIMB's SLF for SMEs extends upon the Bank's track record of helping businesses to advance their sustainability aspirations, having launched its SLF for corporate clients in 2020. The SLF for corporate clients has seen growing acceptance, having increased more than three-fold in 2022 to US$266 Million (RM1.2 billion), compared to RM367 million in 2021.

(RM1 = US$0.222)

The SLF for SMEs is also part of CIMB's ambition to mobilise RM60 billion in sustainable finance by 2024, having met its original target of RM30 billion two years ahead of schedule. As of the end of 2022, CIMB has successfully mobilised RM54.3 billion in sustainable finance under its Green, Social, Sustainable Impact Products and Services (GSSIPS) framework, putting CIMB firmly on track towards becoming an ASEAN sustainability leader by 2024.

For more information about CIMB's SLF for SMEs, visit https://cimb.com.my/greenbizready.