CIMB signs historic SLD RM2.45b transaction with Standard Chartered
KUALA LUMPUR: CIMB Bank has entered into a Sustainability Derivatives (SLD) transaction with Standard Chartered Malaysia in the form of an interest rate swap with a notional value of RM 2.45 billion for the purpose of blanket.
According to Wednesday’s joint statement, the landmark deal is the world’s first ringgit-denominated SLD transaction and to date Asia’s largest environmental, social and governance (ESG) derivative transaction by notional value. .
They said this was based on publicly available data and the latest data compiled by the International Swaps and Derivatives Association (ISDA) in January 2021.
It is important to note that this historic SLD transaction has been structured to involve a pricing mechanism according to which a discount (cost reduction) or a premium (penalty) will be applied depending on whether the CIMB Group achieves previously agreed sustainability performance targets (SPTs).
The ESG overlay of this instrument has been structured around two KPIs that reinforce the sustainability commitments recently announced by the CIMB Group.
The two KPIs are the Group’s percentile ranking for banks based on the S&P Global Corporate Sustainability Assessment1
The statement said this supports the group’s aspiration to be an industry leader on the Dow Jones Sustainability Index (DJSI) and reductions in greenhouse gas (GHG) emissions from scopes 1 and 2 in accordance with the Group’s Net Zero ambitions.
The SPTs that have been set are material, ambitious, objective, measurable and verifiable by independent sources.
As a result of this transaction, CIMB wishes to work with its clients to execute more innovative treasury and derivatives transactions with pricing components linked to ESG or the use of products, such as swaps, contracts to term and options involving currency, interest rate, commodity or foreign exchange transactions. .
CIMB said it is also active in offering loan / finance and bond / sukuk products that are sustainable or linked to sustainability.
CIMB Group CEO Datuk Abdul Rahman Ahmad said this landmark SLD transaction is a testament to the expertise of its treasury and markets team and to “our group’s ambition to be a leader in the sustainability of Asean by 2024 ”.
“This transaction demonstrates our very real commitment to meet our commitments to mobilize RM 30 billion in sustainable finance by 2024, to achieve zero net GHG emissions of scope 1 and 2 by 2030 and net emissions of GHGs by 2050, including financed emissions.
“As a financial intermediary, we play a critical role in channeling finance and capital in a way that supports a just transition to a net zero economy and greater social equity. In collaboration
together with our clients and partners, we look forward to presenting more innovative offerings such as this SLD in the sustainable finance space, ”said Abdul Rahman.
Standard Chartered Malaysia Managing Director and CEO Abrar A. Anwar said: “The attitude towards ESG issues has changed dramatically, but many companies still face challenges when it comes to integrate sustainability.
“Despite their intention to go to net zero by 2050, 67% of companies have yet to take any action due to lack of capital,” he said.
He added that Standard Chartered was grateful for the opportunity to support CIMB in achieving its sustainability agenda as they collectively navigate net zero.
“Healing the world is a colossal task, and this historic agreement shows how essential collaboration is to make it happen. It’s not just about helping customers; we look within and make our own commitments.
“Standard Chartered is striving to achieve net zero carbon emissions from our funding by 2050, as part of our strategic commitment to put the world on a sustainable path to a zero carbon economy,” he said. declared.