KUALA LUMPUR: CIMB Bank Bhd and CIMB Islamic Bank Bhd has recently launched its sustainability-linked loans (SLLs) for corporate borrowers, who are keen to enhance their sustainability performance in alignment with any of the 17 sustainable development goals (SDGs).
SLLs are a type of financing instrument and/or contingent facility where the borrower receives financial incentives upon achieving pre-agreed sustainability performance targets (SPTs).
Incentives are offered, in the form of interest rate rebates, if the borrower is able to demonstrate that it has achieved its SPTs.
SLLs assist and encourage borrowers to improve their sustainability profile or commitment as the financing terms and conditions are aligned to their SPTs.
Availability of the SLL incentive is from Jan 1,2020 to Dec 31,2024.
The use of proceeds in SLLs are not necessarily limited to ‘green’ projects, but can also be for general corporate purposes.
In a statement, CIMB Group CEO Tengku Datuk Seri Zafrul Aziz said CIMB has introduced several new initiatives in the past year to intensify sustainability awareness and action with propositions that can create real, lasting impact environmentally, economically and socially (EES).
“The SLLs have been introduced from our active engagement with our clients to encourage them to embark on and further their own sustainability journeys.
“The SLLs are a catalyst to urge businesses to embed EES considerations in their strategies in order to operate responsibly for the long-term well-being and sustainability of our environment and communities.”
“SDGs and indicators can be adjusted to be in line with our clients’ sustainability strategies and used as a guidance in the setting of SPTs. By working together with clients, the SLLs would be a start for CIMB to assist them to understand their EES risks and opportunities and encourage them to address those risks and leverage the opportunities, ” he added.
Among the SDGs which may be relevant to corporate borrowers are quality education; gender equality; industry, innovation and infrastructure; or even responsible consumption and production.
The identification of suitable SPTs and their measurements could be guided by external consultants, external sustainability indices, borrowers’ internal measurement by their own established sustainability team or from CIMB’s Group Sustainability department.