Hong Leong Bank introduces ESG Framework towards Sustainable Financing

KUCHING: In its efforts towards developing sustainability financing practices, Hong Leong Bank (HLB) has introduced its ESG Framework which will incorporate Environmental, Social and Governance (ESG) considerations in the Bank’s credit evaluation of its SME and Corporate Customers.

This framework not only underlines HLB’s commitments towards building a vibrant and sustainable ecosystem in the communities we operate in, but also promotes adoption of sustainable business strategies and practices amongst its customers.

HLB worked closely with the Jeffrey Sachs Center on Sustainable Development at Sunway University to develop and roll-out a robust training module for its relationship and credit risk managers that aligns with the Bank’s ESG framework incorporating Bank Negara Malaysia’s (BNM) direction in the greening of business activities as well as transition towards a low carbon and climate resilient economy.

The framework incorporates 12 of the 17 United Nations Sustainable Development Goals and Bank Negara Malaysia’s (BNM) Guiding Principles in assessing economic activities taken from their Climate Change and Principle-Based Taxonomy Discussion Paper.

The Bank also referred to international and national frameworks and standards including the International Finance Corporation (IFC) as well as BNM’s Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF).

Domenic Fuda, Group Managing Director and Chief Executive Officer of HLB said “As a Bank with over 110 years of rooted history in Malaysia, we have always embraced our value of being here for the long term, long before the concept of sustainability was introduced in business practices.

“From innovating our banking products to talent management, we always keep a long-term mindset which includes our role in creating and sustaining a vibrant eco-system of communities and environment.

“By integrating ESG factors to guide us in sustainable lending and financing, we hope to create direct and positive impact to our environment and socio-economy as well as identify emerging opportunities and manage emerging risks more effectively.”

To ensure that the Bank is able to facilitate this ESG transition for their SME and corporate customers, HLB is also committed to creating a cultural shift among Bank staff, where ESG considerations become part and parcel of the decision-making process to effectively engage customers on the Bank’s ESG standards and practices.

According to Yow Kuan Tuck, Managing Director, Business Corporate Banking of HLB, whilst the ESG Framework incorporates sustainability best practices into the Bank’s financing evaluation process, the approach is to encourage more businesses to look at sustainability as an investment which may bring long-term competitive advantages rather than purely a cost of doing business.

“The Covid-19 crisis is a good example of a disruptive change, which has exposed the vulnerabilities and fragility of our socio-economic structure and has prompted more discussions and investments into areas that may enhance the prospects of a quick recovery and future growth such as digitalization.

“With the introduction of the ESG Framework, we hope this will encourage our Relationship Managers and those who have direct engagement with our Corporate and SME clients to have conversations with our customers on the sustainability and ESG agenda, as part of their engagement with HLB,” said Yow.