BIMB’S IMPLEMENTATION OF THE CLIMATE CHANGE PRINCIPLES-BASED TAXONOMY (CCPT) Introduction The CCPT Classification exercise enables financial institutions to understand the extent of their portfolio exposure to climatic impacts and risks. In line with this, BIMB has obtained an initial view of climatic risk exposure based on the classification guidance provided by Bank Negara Makaysia. As per the Guiding Principles as stated in the CCPT Guidance Document, the data is intended to be used to determine areas where opportunities for sustainable financing may arise as well as sectors or market segments that may be risk-weighted in future to manage and mitigate negative climatic impact. BIMB is using a combined methodology utilising data and references from multiple sources to form a basis for application of the CCPT guidelines. BIMB recognises that sustainability data is currently not fully comprehensive and does not cover the entire financing portfolio for all segments. These limitations are mainly concerning the SME and retail segments where current data on climate and sustainability impacts are lacking. BIMB views the CCPT exercise as a promising and useful endeavour for financial institutions to apply and contribute towards continual improvement of the financial industry in terms of ESG and will continue to implement this as part of the Bank’s sustainability practice. Excerpt from the CCPT (BNM, April 2021) The CCPT aims to introduce a principle-based taxonomy for Financial Institutions (FIs) to assess and categorise economic activities according to the extent to which the activities meet climate objectives and promote the transition to a low-carbon economy. The taxonomy also incorporates the consideration of broader environmental outcomes through the principle of no significant harm, with specific regard to how business operations affect pollution, biodiversity and resource efficiency. In supporting an orderly transition, the taxonomy recognises remediation measures and introduces a progressive system of transition categories to acknowledge concrete efforts and commitments by businesses to adopt sustainable practices. The CCPT also aims to facilitate standardised classification and reporting of climate-related exposures to support risk assessments at the institution and systemic levels, strengthen accountability and market transparency, and encourage financial flows towards supporting climate objectives. FIs can also leverage on the taxonomy in the design and structuring of green finance solutions and services to accelerate development of green sectors and activities, and decarbonisation efforts. BIMB’s Interpretation of the CCPT Guidance Document BIMB recognises the impacts of climate change on the environment and society as well as the importance of ESG-related governance systems to enable businesses to improve on and implement robust systems and controls over their sustainability footprint. The role of banks in financing businesses and consumers contribute them to participate in various economic activities that may impact the environment and society in terms of climate change and sustainability. The implementation of CCPT enables BIMB to obtain an overview of how key financing assets are tied to climate risk and identify opportunities for more sustainable financing channelled towards climate-positive economic activities. BANK I SLAM MALAYS IA BERHAD 118 SUSTAINABLE FINANCE
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