CIMB Islamic Bank has launched the Sustainability-Linked Financing (SLF) program alongside its conventional counterpart with RM3 billion (US$663.83 million)-worth of financing opportunities for SMEs through 2030 as part of the GreenBizReady initiative.
CIMB has signed a memorandum of cooperation with the Malaysian Green Technology and Climate Change Corporation (MGTC), an agency under the Malaysian Ministry of Natural Resources, Environment and Climate Change (NRECC), in a joint commitment to explore opportunities to drive sustainability adoption among SMEs.
“By leveraging public–private partnerships and public–private-philanthropic partnerships as part of a whole-of-society approach, we can ensure that Malaysian businesses are well-positioned to thrive in tomorrow’s economy,” Nik Nazmi, the minister of the NRECC, remarked.
According to Ahmad Shazli Kamarulzaman, deputy CEO of group commercial banking at CIMB Group, the program will help SMEs remain competitive and resilient both regionally and globally. It will also support SMEs’ contributions to Malaysia’s green transition as part of the National Energy Transition Roadmap announced last week.
The program is expected to help SMEs adapt to upcoming local regulations as well as transitioning toward sustainable supply chains in the global economy by complying with international regulatory developments including the EU Carbon Border Adjustment Mechanism.
The program, which is aligned with the Loan Market Association’s Sustainability-Linked Loan Principles, will incentivize SMEs to achieve credible greenhouse gas emission reduction targets through financing rebates.
According to the banking group, SLF is generally costly and bespoke due to verification requirements to meet global standards. The new program will see the group tap into the MGTC’s existing infrastructure to overcome this challenge.
The sustainability performance targets for the linked financing include energy and fuel consumption by inputting data into the MGTC’s Low Carbon Operating System.
The GreenBizReady initiative was originally launched in 2021. The SLF program is part of the group’s goals to mobilize RM60 billion (US$13.28 billion) in sustainable finance by 2024. Notably, the group has met its RM30 billion (US$6.64 billion) financing milestone two years ahead of schedule.