CIMB targets 16% emission cut in palm oil, 38% in power


CIMB Group Holdings Bhd is making significant strides in sustainable banking, outlining ambitious targets to cut emissions, aiming for a 16% reduction in the emissions intensity of its palm oil portfolio and concurrently pursuing a 38% reduction in the emissions intensity of its power generation portfolio by 2030. 

Palm Oil Sector Pioneering 

CIMB’s said the 16% reduction target, equivalent to a 2% annual average reduction, is aimed at fostering sustainable palm oil production. 

The bank recognises the critical role played by businesses, especially micro, small and medium-sized enterprises (MSMEs), in steering the palm oil industry towards more environmentally conscious practices. 

“The sustainable production of palm oil is not just a business imperative; it’s a responsibility. Our commitment is to actively support and enable our clients, including MSMEs, in adopting certified sustainable palm oil standards,” says CIMB group CEO Datuk Abdul Rahman Ahmad. 

The strategy involves engaging closely with clients, encouraging the adoption of certified sustainable palm oil production methods. 

CIMB seeks to minimise environmental impacts, boost yields through improved agricultural practices, and curtail operational greenhouse gas emissions. 

The bank’s comprehensive plan aligns with global initiatives, as evidenced by its commitment to the science-based targets initiative (SBTi) and forest, land and agriculture (FLAG) guidance. 

“CIMB is proud to be the first bank globally to announce a science-based Net Zero decarbonisation pathway for the palm oil sector. This underlines our commitment to industry leadership and sustainability,” added Abdul Rahman. 

CIMB is not merely setting emission reduction targets; it’s actively working towards a holistic approach. 

The No Deforestation, No Peat, and No Exploitation (NDPE) commitment, rolled out in 2022, ensures that clients establishing new plantations undergo a thorough high conservation value (HCV) assessment. 

This step safeguards critical conservation areas and peatlands, ensuring a responsible and sustainable approach to palm oil production. 

Powering Clean Energy 

Simultaneously, CIMB acknowledges the imperative to address the carbon footprint of the power sector in the Asean region.

The 38% reduction target in the emissions intensity of its power generation portfolio aligns with the International Energy Agency’s (IEA) 2023 Net Zero Roadmap reference scenario.

As South-East Asia grapples with fossil fuel dependence, CIMB’s commitment is pivotal in steering the region towards a just energy transition. 

“The power sector holds immense potential for a cleaner, more sustainable future. CIMB is committed to driving this change by actively collaborating with power clients and directing financing towards clean energy production,” says CIMB Sustainable Finance head Jane Tan. 

The power sector’s dependence on fossil fuels is a known challenge, and CIMB aims to be at the forefront of the solution. 

The interim Scope 1 emissions target and the overarching goal of achieving an emissions intensity target of 272kg of CO2 equivalent per megawatt-hour generated (kgCO2e/ MWh) by 2030 demonstrate the bank’s commitment to supporting a cleaner, more sustainable energy mix. 

Towards a Greener Tomorrow 

CIMB’s commitment to sustainability is not a recent development but a continuum of its earlier strides.

Being the first emerging market bank globally to commit to exiting coal in 2021, CIMB has consistently raised the bar for responsible banking. 

The targets set for 2030 build upon these earlier commitments, solidifying CIMB’s position as a trailblazer in the financial sector’s sustainability landscape. 

“As we set ambitious targets for emissions reduction, we are mindful of our responsibility in ensuring a just transition. CIMB remains committed to supporting our clients and navigating the decarbonization journey together,” noted Abdul Rahman. 

As part of its Forward23+ strategic plan, CIMB remains dedicated to catalysing the adoption of environmentally and socially responsible practices. 

The bank’s pledge to complete targets for other key sectors by early 2024 showcases its commitment to contributing to a Net Zero economy. 

In the face of a changing climate and growing environmental concerns, CIMB’s dual commitment to reducing emissions intensity in both palm oil and power portfolios sends a clear signal — sustainable banking is not just an aspiration but a strategic imperative for a better and greener tomorrow.

  • This article first appeared in The Malaysian Reserve weekly print edition