The Group announced that it will be committing to a series of strengthened sustainability-based commitments, amongst which include mobilizing RM30bn towards sustainable finance as part of its continued ambition toward becoming an ASEAN sustainability leader by 2024. In addition, the Group also announced its commitments toward mitigating climate change, while also committing to invest RM150m over five years, and 100,000 in employee volunteerism hours annually by 2024 to positively impact lives, communities and businesses across ASEAN. The Group has been making notable headway in its sustainability-based initiatives since embarking on this journey in 2019. An increasingly important aspect in investors’ assessments and investment considerations, we are optimistic that the Group will meet its immediate 2024 goals given management’s resolve. While we remain optimistic over CIMB’s longer-term prospects, underpinned by its F23+ initiatives, we retain our Neutral call given limited upside to our unchanged dividend-derived target price of RM5.10.

• Commitments on sustainable financing. The Group, as mentioned earlier, will mobilize RM30bn toward sustainable financing by 2024. In fact, it has already extended RM10bn in offerings under its Green, Social, Sustainable Impact Products and Services (GSSIPS) framework as at 2021, ahead of its original schedule. The higher financing target will include wholesale and commercial financing, bonds and intermediation, wealth products, and products that enable financial inclusion such as affordable home financing and other products catered to the B40 group. In line with its Sustainable Financing Policy introduced in 2019, CIMB became the first banking Group in Malaysia and the first in ASEAN to commit to phasing out coal from its portfolio.

• Commitments toward climate change. To this end, the Group is committed to ensuring net zero operational greenhouse gas (GHG) scope 1 and 2 emissions by 2030 and net zero overall GHG emissions by 2050, together with a No Peat, No Exploitation (NDPE) stance.

• Other initiatives. To ensure delivery on its commitments, the Board has established a Group Sustainability and Governance Committee. Earlier on, the Group had already set a target (in its F23+ Strategic Plan) of being in the top quartile of the Dow Jones Sustainability Index by 2024. To-date, CIMB has improved its position from the 19th percentile in 2018 to 65th percentile in 2020. CIMB is a founding signatory of the United Nations Environment Programme Finance Initiative Principles for Responsible Banking, a signatory of the Collective Commitment on Climate Action as well as the Net-Zero Banking Alliance, and an official supporter of the Task Force on Climate-related Financial Disclosures.

Source: PublicInvest Research - 23 Sept 2021