Kuala Lumpur: CIMB Bank Berhad and CIMB Islamic Bank Berhad (collectively “CIMB” or “the Bank”) have enhanced their GreenBizReady proposition with the launch of Sustainability-Linked Financing (“SLF” or “the Programme”) for small and medium enterprises (“SMEs”). With a total allocation of RM3 billion through 2030 for the Programme, CIMB is the first bank in the market to offer a complete value proposition for SMEs to tap into sustainability-linked financing opportunities, including simple tools for measurement and verification.

The SLF aims to incentivise SMEs to achieve credible greenhouse gas (“GHG”) emission reduction targets through attractive financing rebates of up to 0.50% per annum, as they secure financing to meet their capital or expansion needs. Once sustainability performance targets have been agreed with CIMB, SMEs only need to input data such as energy and fuel consumption into Malaysian Green Technology and Climate Change Corporation’s (“MGTC”) Low Carbon Operating System (“LCOS”) platform, a simple and user-friendly web-based tool. Additionally, by combining the SLF with Bank Negara Malaysia’s (“BNM”) Low Carbon Transition Facility (“LCTF”), SMEs can also benefit from better financing rates.

As part of the SLF launch, CIMB inked a Memorandum of Cooperation (“MoC”) with MGTC, with both parties committing to explore further opportunities to drive sustainability adoption among SMEs. To formalise the MoC, a signing ceremony was held recently between the two parties, witnessed by YB 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 that was 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.

YB Nik Nazmi said, “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. 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 are well-positioned to 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.

“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, in addition to providing 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,” he added.

Ahmad Shazli Kamarulzaman, Deputy CEO, Group Commercial Banking, CIMB Group said, “As a purpose-driven organisation, CIMB is firmly committed to empowering SMEs to adopt sustainable practices. Our SLF offering for SMEs reflects this commitment, in line with Malaysia’s Net Zero ambitions and CIMB Group's target to achieve Net Zero GHG emissions by 2050, including scope 3 financed emissions.

“We are very pleased to build on our cooperation with MGTC, an existing key partner under our GreenBizReady proposition, to catalyse sustainable practices among SMEs. This will help them to remain competitive and resilient both regionally and globally, and at the same time encourage their participation and contributions to the country’s green transition as part of the recently announced National Energy Transition Roadmap (“NETR”),” he added

MGTC CEO, Ts. Shamsul Bahar Mohd Nor 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.

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," he added.

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 to overcome these long-standing challenges of measurement and verification of sustainability targets in a holistic and cost-effective manner, providing access to incentives that have generally only been available to corporates in the past. The SLF is also aligned with the globally recognised Loan Market Association's Sustainability-Linked Loan Principles.

Besides reducing negative environmental impact, the Programme also 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 interest and acceptance, having increased more than three-fold in 2022 to RM1.2 billion, compared to RM367 million in 2021.

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 at end 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.

Source: CIMB