Hong Leong Bank introduces ESG framework

From left: Hong Leong Bank officials: Chief marketing & communication officer Zalman Zainal; managing director – business & corporate Banking Yow Kuan Tuck; chief financial officer Malkit Singh Maan and group MD and CEO Domenic Fuda. They are accompanied by Sunway University and Sunway Education CEO Dr Elizabeth Lee; deputy director of Jeffery Sachs Center on Sustainable Development, Sunway University Prof Leong Choon Heng, Sunway University’s Prof Agamutu Pariatamby and research fellow, Jeffery Sachs Center on Sustainable Development Dr. Chen Jit Ern.

KUALA LUMPUR: Hong Leong Bank Bhd has introduced its environmental, social and governance (ESG) considerations in its credit evaluation of its SME and corporate customers.

In a statement issued on Wednesday, it said the ESG framework was part of its efforts towards developing sustainability financing practices.

“This framework not only underlines Hong Leong Bank’s commitments towards building a vibrant and sustainable ecosystem in the communities we operate in, but also promotes adoption of sustainable business strategies and practices amongst its customers, ” it said.

The bank worked closely with the Jeffrey Sachs Center on Sustainable Development at Sunway University to develop and roll-out a robust training module for its relationship and credit risk managers.

This was to ensure the framework aligns with the bank’s ESG framework incorporating Bank Negara Malaysia’s direction in the greening of business activities as well as transition towards a low carbon and climate resilient economy.

The framework incorporates 12 of the 17 United Nations Sustainable Development Goals and Bank Negara’s guiding principles in assessing economic activities taken from their climate change and principle-based taxonomy discussion paper.

It said in drawing up the framework, it also referred to international and national frameworks and standards including the International Finance Corporation (IFC) as well as Bank Negara’s value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF).

Hong Leong Bank’s group managing director and CEO Domenic Fuda said as a bank with over 110 years of rooted history in Malaysia, it has always embraced our value of being here for the long term, long before the concept of sustainability was introduced in business practices.

“From innovating our banking products to talent management, we always keep a long-term mindset which includes our role in creating and sustaining a vibrant eco-system of communities and environment.

“By integrating ESG factors to guide us in sustainable lending and financing, we hope to create direct and positive impact to our environment and socio-economy as well as identify emerging opportunities and manage emerging risks more effectively, ” Fuda said.

Hong Leong Bank’s managing director, business corporate banking, Yow Kuan Tuck, whilst the ESG Framework incorporates sustainability best practices into the bank’s financing evaluation process, the approach is to encourage more businesses to look at sustainability as an investment which may bring long-term competitive advantages rather than purely a cost of doing business.

“The Covid-19 crisis is a good example of a disruptive change, which has exposed the vulnerabilities and fragility of our socio-economic structure and has prompted more discussions and investments into areas that may enhance the prospects of a quick recovery and future growth such as digitalisation, ” he said.