22 October 2020
The RM100 million revolving credit facility is the first SLL for an East Malaysian company and the first SLL for a utility sector company in Malaysia, reaffirming Sarawak Energy’s commitment to keep its grid emission intensity in alignment with the Paris Agreement and light up 100% of Sarawak by 2025 as the implementing agency of the Ministry of Utilities Sarawak.
Kuala Lumpur: Sarawak Energy Berhad (“Sarawak Energy”) has secured an RM100 million sustainability-linked loan (“SLL”) in the form of a revolving credit facility from CIMB Bank Berhad (“CIMB” or “the Bank”), making Sarawak Energy the first East Malaysian company, and the first utility company in Malaysia, to secure a loan linked to measurable sustainability performance targets (“SPTs”). The announcement was made via a virtual SLL acceptance ceremony during a Fireside Chat session with Sarawak Energy on “Creating a Sustainable Business Model that Works”, in conjunction with CIMB’s The Cooler Earth Sustainability Summit 2020.
Datuk Amar Abdul Hamed Sepawi, Chairman of Sarawak Energy, said, “Sarawak Energy plays an important role as the State’s primary energy developer and power utility, and as a key implementer of the Sarawak Government’s vision and strategic initiatives in the provision of clean, renewable, reliable and affordable energy to our communities. We strive to incorporate sustainability into our businesses, operations and interactions with the community. Through a more strategic approach to sustainability, we are creating value for all our stakeholders by managing long-term risks and opportunities. This sustainability-linked loan, validates our efforts in sustainability – not only is it good for the environment, it is also good for business.”
Commenting on the achievement, Datu Haji Sharbini Suhaili, Group Chief Executive Officer of Sarawak Energy also said, “We are delighted to have secured our very first sustainability-linked loan with CIMB, which will support our journey towards meeting Sarawak and the region's need for reliable and renewable energy. We recognise the importance of sustainable financing and this is part of our efforts in sustainable management and embedding sustainable financing into our funding strategies to improve our Environmental, Social and Governance (“ESG”) performance.”
Sarawak Energy is also the first Malaysian company to become a signatory of the ‘Business Ambition for 1.5°Celsius’, a joint initiative led by the Science Based Targets initiative in partnership with the United Nations Global Compact and the We Mean Business coalition, which requires signatories to set science-based emissions reduction targets aligned with limiting global temperature rise to 1.5°C and reaching net-zero emissions by 2050.
Dato’ Abdul Rahman Ahmad, Group Chief Executive Officer, CIMB Group said, “CIMB is delighted to support Sarawak Energy in their sustainability journey. We take our commitment to sustainability seriously, and understand our multifaceted role as a financial institution in working with stakeholders to promote sustainable development. This SLL is a testament to our commitment, in this case by incorporating environmental and social considerations into financing terms to incentivise and drive sustainable corporate behaviour. Our SLL offering has been well received since we first introduced it earlier this year, and we hope to be able to announce more SLLs as well as more positive impact products and services for our clients in the near future.”
The SLL is based upon sustainability performance targets (“SPTs”) aimed at improving the environmental and social performance of Sarawak Energy from FY2020 to FY2023, and serves as a reminder for Sarawak Energy to keep its grid emission intensity in alignment with the Paris Agreement and the renewable energy developer’s pledge to ‘Business Ambition for 1.5°Celsius’. It also keeps Sarawak Energy on track in its goal to fully electrify Sarawak by 2025. CIMB will grant a rebate against the loan interest if these pre-agreed SPTs are met. Sarawak Energy intends to use the interest rebates received from CIMB for its youth education sustainability programmes, as a way of giving back to the community.
CIMB is the first ASEAN banking group to become a founding signatory of the United Nations Environment Programme Finance Initiative (“UNEP FI”) Principles for Responsible Banking, and a signatory of the Collective Commitment on Climate Action. In 2019, CIMB introduced its Group Sustainable Financing Policy and its Positive Impact Products & Services (“PIPS”) Framework. Earlier this year, CIMB was one of the first banks in Malaysia to announce the SLL incentive, having committed RM3 billion to SLLs, and the Bank has been proactively presenting the offering to clients.