Risk Management & Business Resilience

Biodiversity Loss and Ecosystem Collapse

(high likelihood; high impact)

Biodiversity Loss  
The decline in species diversity and abundance, along with the degradation of ecosystems and their services. This can result from habitat destruction, pollution, climate change, overexploitation of resources and the introduction of invasive species. 

Ecosystem Collapse  
The rapid and irreversible deterioration of an ecosystem’s structure, function, and services. This can be triggered by major disturbances such as natural disasters, disease outbreaks, or human interventions that disrupt the delicate balance between species and their environment.

Biodiversity loss and ecosystem collapse present significant risks to human wellbeing and both the ASEAN and global economies. Key impacts include: 

• Reduced agricultural productivity, disrupting supply chains and impacting food security

• Increased disease transmission due to the loss of natural pest control mechanisms

• Disproportionate harm to vulnerable communities

• Business disruptions for sectors dependent on ecosystem services 

For financial institutions, negative impacts can be both direct and indirect through lending, financing, investment and underwriting activities.

We recognise the importance of biodiversity protection and restoration in maintaining ecological balance. Our key actions include:

 
• Contributing to government policy consultations and industry working groups to shape future policies

• Engaging with industry players to understand challenges and explore ways forward

• Participating in international discussion forums to implement best practices.

We plan to develop our overarching Biodiversity Strategy and Roadmap in 2024.

In 2024, we published our Statement on Biodiversity and Nature and commenced development of a strategy and roadmap. Set for publication in 2025 alongside sectoral assessments, these initiatives build on our NDPE commitment requirement, which has been in place since 2022

Anti-ESG Sentiments

(medium likelihood; high impact)

The growing political divide on climate change has led to rising anti-ESG sentiments, particularly in the US, where regulatory pushback has resulted in bans on ESG-based investments and corporate retreats from sustainability commitments. Major banks, asset managers and insurers have exited climate coalitions, while some companies have scaled back Diversity, Equity and Inclusion (DEI) initiatives due to shifting political and investor pressures.

Despite these headwinds, global climate action continues. COP29 secured commitments to mobilise US$300 billion annually for developing nations by 2035, though this remains short of what experts say is needed. As the ESG landscape evolves, financial institutions must balance regulatory, political and stakeholder expectations while staying committed to longterm sustainability goals.

The rise of anti-ESG sentiments is reshaping the global sustainability landscape, introducing geopolitical and economic uncertainty. Key potential impacts include:

• Governments influenced by anti-ESG sentiments may introduce policies that weaken or oppose sustainability initiatives, creating an unpredictable business environment and hindering CIMB’s ability to meet its sustainability commitments

• A shift towards non-ESG sectors could divert financing away from sustainable projects, impacting the growth of green industries and increasing investment volatility

• Reduced policy support for ESG initiatives may delay advancements in green technologies, such as carbon capture and renewable energy, potentially slowing the transition to a low-carbon economy

We take a structured, science-based approach to climate commitments, upholding transparency, collaboration and measurable outcomes. We are therefore:

• Engaging policymakers, regulators, investors, industry bodies and businesses to share knowledge and develop solutions that drive meaningful progress

• Grounding our targets in scientific methodologies keeping them robust, data-driven and aligned with international frameworks

• Adhering to local regulations and referencing local taxonomies while actively contributing to the development of climate policies

• Monitoring evolving market trends and public sentiment to refine strategies

• Engaging and supporting high emission industries in transitioning sustainably

Greenwashing Risk

(medium likelihood; high impact)

CIMB’s commitments, such as achieving Net Zero by 2050, and No Deforestation, No Peat and No Exploitation are typically phased in across our operating markets. For example, in 2022, we rolled out our NDPE commitment requirement in larger markets, while smaller markets adopted the policy in 2023.

At the same time, expectations and standards for responsible banking are rising rapidly. With multiple parties within CIMB communicating sustainability efforts across various channels, there is a risk of miscommunication or overstating sustainability claims.

Greenwashing – or even an allegation of it – can harm the Bank’s reputation and erode trust, making it critical to maintain credibility in our commitments. Potential impacts include:
 
• Increased regulatory scrutiny, leading to stricter oversight and compliance requirements

• Reputational damage, affecting stakeholder trust and market competitiveness

• Loss of investor confidence, potentially impacting funding and partnerships

• Decline in employee morale and productivity

• Challenges in attracting quality candidates

To mitigate greenwashing risks, we focus on:

• Regularly reviewing policies and commitments to align with evolving expectations

• Strengthening governance and monitoring mechanisms to uphold transparency and accountability

• Minimising the time gap between announcing and implementing policies across our footprint

• Implementing the Sustainability Communications Procedure to guide sustainability-related communications

• Mitigating inaccurate disclosures by aligning with recognised reporting frameworks and obtaining third-party verification

Shortage of Sustainability Professionals
(high likelihood; low impact)

There is a small subset of the talent pool available that has both banking and sustainability expertise, thus making it critical to identify, attract, develop and retain the right people to drive and ensure continual improvement of CIMB’s sustainability agenda.

Without this specialised talent pool, the Bank may face significant hurdles such as:  

• Limitations to the effectiveness and progress of our sustainability initiatives, potentially slowing down innovation and strategic implementation  

• Reduced capacity to navigate and excel within the rapidly changing sustainable finance sector, diminishing our competitive advantage

To meet the growing need for specialised professionals in sustainability, our strategies include:  
 
• Enhancing internal capabilities via our Sustainability Academy, through targeted learning and training programmes to embed a culture of sustainability and embedding these into existing talent development initiatives  

• Establishing an Integrated Sustainability Operating Model (ISOM) to deepen the engagement of business units/enablers in Sustainability efforts, including appointing division-level sustainability specialists or champions, achieved through internal transfers or new hires