CIMB Islamic Bank and its conventional counterpart have committed to providing RM100 million (US$22.71 million) in financing through the Low Carbon Transition Facility (LCTF) to encourage and empower businesses to adopt low-carbon and sustainable practices for business resilience. The facility is part of the LCTF financing scheme established by Bank Negara Malaysia in January 2022 and falls under CIMB’s green, social, sustainable impact products and services framework.
The facility offers collateral-free financing of up to RM10 million (US$2.27 million) with a repayment period of up to 10 years and a profit rate of 5% per annum. Part of the bank’s commercial banking offering, it provides businesses with working capital to finance the adoption of sustainable and low-carbon practices including the installation of solar power systems, the adoption of recycled or biodegradable materials, improved process efficiency to reduce waste and obtaining sustainability certification.
The CIMB LCTF is a continuation of the bank’s efforts in contributing to the sustainable development of businesses including the GreenBizReady program launched in 2021 which aims to help SMEs in Malaysia enhance their environmental performance and economic competitiveness with practical knowledge.
“Sustainability is a strategic business approach to create long-term value and business resilience. As a purpose-driven financial institution, we are proud to support the green transition by providing businesses, including SMEs, with access to innovative sustainable financing such as LCTF. Through this facility, businesses will be able to reduce their environmental footprint by adopting sustainable practices such as renewable energy, energy efficiency and sustainable materials, which at the same time will help to bring down their operational costs,” Victor Lee Meng Teck, CEO of group commercial banking at CIMB Group, commented.
In addition to the LCTF, CIMB has also allocated RM100 million to the SME Renewable Energy Financing program as well as other sustainability-linked financing (SLF) efforts. The bank has provided SLF financing in excess of RM1 billion (US$227.1 million) to corporate clients working toward its target of offering RM3 billion (US$681.27 million) in SLF through 2024. The LCTF reinforces its ambition to mobilize RM30 billion (US$6.81 billion) in sustainable financing by 2024 under CIMB Group’s Forward23+ strategic plan.
The facility will also contribute to the Malaysian government’s commitment to achieve carbon neutrality by 2050 as well as the bank’s ambition of achieving net-zero greenhouse gas emissions by 2050 including Scope 3 financed emissions.