Malaysia's CIMB commits to phase out coal financing by 2040

KUALA LUMPUR (Reuters) - Malaysia’s CIMB Group Holdings Bhd on Tuesday committed to phase out coal from its portfolio by 2040, saying it was the first banking group in Malaysia and Southeast Asia to do so.

Big international banks have been exiting coal financing at an accelerated rate this year amid pressure from non-governmental organisations (NGOs) and a global energy transition.

The lender, Malaysia’s second largest by assets, said its new ‘Coal Sector Guide’ will prohibit asset-level or general corporate financing for new thermal coal mines and coal-fired power plants, as well as expansions, except when there are existing commitments.

The guide will come into effect next year across all CIMB’s operating markets, it said in a statement.

“We are aware that our role as a financial intermediary puts us in a critical position, as our financing decisions and financial offerings can help to shape the long term trajectory of economic development,” CIMB Group Chairman Mohd Nasir Ahmad said.

The group is working towards announcing more sustainability-related measures, in particular with respect to its positive impact financing target, he added.

CIMB said it has also strengthened its sustainable financing policy requiring clients in the “High Sustainability Risk Sector”, such as palm oil, forestry, and oil and gas, to meet its environmental and social standards at the point of acquiring financing.

The firm represents the first globally significant financial institution in the developing world to commit to a coal exit strategy, Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis said in the statement.

Reporting by Mei Mei Chu; Editing by Kirsten Donovan