CIMB’S The Cooler Earth Summit 2021 Opening Address

SALUTATIONS

Yang Berbahagia Datuk Mohd Nasir Ahmad,
Chairman, CIMB Group,

Yang Berbahagia Dato’ Abdul Rahman,
Group Chief Executive Officer, CIMB Group,

Distinguished guests, ladies and gentlemen

A very good morning to all of you.

 INTRODUCTION

1. It gives me great pleasure to be here this morning. Allow me to thank the organiser, CIMB Group for inviting me to officiate and deliver the opening address for this year’s The Cooler Earth Summit.
   
   
2. This summit, already in its third instalment has grown in importance as an engagement platform between the financial sector and its stakeholders – the community, businesses, social enterprises, NGOs as well as policy makers and regulators in taking action on a wide range of topics on sustainability. I would like to congratulate CIMB for its continuous commitment in advocating and embracing the principles of sustainable development.
   
   
3. Featuring the theme “Align, Act, Accelerate”, it is indeed timely for us to convene here, as we continue to navigate a tremendously challenging landscape – from the perspective of the socioeconomic impact caused by COVID-19, and climate change.

THE STATE OF THE NATION ON COVID-19 AND CLIMATE CHANGE

Ladies and gentlemen,

4. Allow me to start with our progress on COVID-19, particularly on the National Recovery Plan (NRP) as it gives some context on where we should be heading in terms of sustainability. At the height of the recent pandemic, we have seen the daily average:
   
   
   • of new cases increase to over 21 thousand;
   • hospital admissions topping over 15 thousand people; and
   • more than 1,500 ICU beds utilised.
     
     
5. Today, we are seeing these numbers steadily declining, attributed to the acceleration of our vaccination programme. With more than 18 million people fully vaccinated, all but one state has transitioned to different phases of the NRP. This has enabled the reopening of various economic and social sectors, including tourism via a travel bubble piloted in Langkawi.
   
   
6. Based on existing data, we are not out of the woods yet. However, I believe there is light at the end of the tunnel. As one of the fastest nations in the world to administer vaccinations, we are on track to fully vaccinate 100 per cent of the adult population by end of October.
   
   
7. Complementing this vaccination programme is over 300 billion ringgit worth of assistance still available, which will support our GDP that is expected to grow between 3 to 4 per cent this year. As recovery gathers momentum, our nation will be on track to achieve growth between 5 to 6 per cent in 2022, based on the latest projections by World Bank and the IMF.
   
   
8. Ultimately, it is important to highlight that the enablers to these achievements were the outcomes of a whole-of-nation approach, where various parties work together hand-in-hand against a common threat, in solidarity as one Keluarga Malaysia.
   
   
9. Guided by the NRP which is backed by science, data and technology – along with vaccine administration done in record time, this has set promising examples which we must follow when it comes to sustainability issues, particularly in tackling climate change.
   
   
10. In this context, the progress we have seen in the areas of innovation, development, and commercialisation of sustainable technologies during the pandemic, can, and should be further embraced in our daily lives. This is especially important as previous waves of rapid industrialisation have shown numerous negative consequences.
    
    
11. Throughout those periods, humanity did very little to mitigate the impact of industrialisation to the planet. We grew reliant on fossil fuels. Our resource-intensive economy has continued to convert land for agriculture, infrastructure and urban expansion. We depleted our fish stock in the waters from over-fishing, and ‘tolerated’ plastic and toxic waste in those same waters.
    
    
12. And today, the outcome is the constant pollution of our air, land and sea – affecting nature and biodiversity. Almost every other week, we are encountering many incidences of climate-related disasters – from flash floods in several states, followed by the recent tragedy in Penampang, to the landslide in Kemensah Heights. All these have claimed lives and displaced many from their homes as well as disrupted livelihoods – evidence that accelerated climate change is here, right now.
    
    
13. And more pressingly, just as COVID-19 has widened the inequality gap, climate change too has mostly impacted those least able to shoulder the burden. Experts estimate that without any mitigating policies, the cumulative cost of climate change to our country stands at an average of over 400 billion ringgit a year, over a period of 100 years beginning 20101.
    
    
14. In general, these are similar to the findings in the latest Intergovernmental Panel on Climate Change (or IPCC) report, which described our current climate change preparedness as “a code red for humanity”. While the world has been reeling from COVID-19 pandemic, climate change remains as an equally, if not more, severe threat in the near future. This was also reaffirmed by the Director-General of WHO, who mentioned that “the risks posed by climate change could overshadow those of any single disease.” After all, climate change does not have the equivalent of a vaccine as a fix.

TACKLING THE CLIMATE CRISIS

Ladies and gentlemen,

15. Given the gravity of the situation, transitioning to a climate resilient economy is no longer an aspiration, but an urgent requirement to avoid irreversible damage to our planet and society. We need urgent reforms and a whole-of-nation approach in addressing the threats to both fronts.
    
    
16. We must transform our economic and financial systems, as well as sectors pertaining to our food, water and energy in a manner that is sustainable, inclusive, just and fair. We need to start pricing in carbon emissions and realign more incentives towards clean energy and the circular economy, ending the free ride that industrial polluters have had over the years.
    
    
17. And the good news is that climate change related goals are not only achievable, but also make for sound economic policy. According to the IMF, the emphasis on green investments, such as renewables, low carbon mobility and energy efficiency offer a huge opportunity – potentially raising global GDP by approximately 2 per cent, and creating millions of new jobs throughout this decade.
    
    
18. In capturing this opportunity and addressing climate-related issues, the Government has made meaningful progress both at the global and domestic fronts since the signing of the Paris Agreement.
    
    
19. At the international level, we have, amongst other:
    
    
    • Firstly, we have increased our unconditional Nationally Determined Contributions (or NDC) to cut the intensity of GHG emissions from 35 to 45 per cent of GDP by 2030 compared to our 2005 levels;
    • Secondly, we are now part of the Coalition of Finance Ministers for Climate Action (or CFMCA); and
    • Thirdly, we have pledged to the Helsinki Principles in promoting national climate action through fiscal policy and the use of public finance endorsed by the CFMCA.
      
      
20. Closer to home, the six key priorities under the Malaysian Climate Action Council (MyCAC) will be further accelerated. These include:
    
    
    • Implementation of the Low Carbon Mobility Development Plan;
    • Developing a National Low Carbon City Masterplan; and
    • More recently, the Government has agreed to develop a Voluntary Carbon Market Guidelines and a Domestic Emission Trading Scheme. This will be led by the Environment and Water Ministry (or KASA), in collaboration with the Ministry of Finance, Bursa Malaysia and other key stakeholders.
      
      
21. Overall, these priorities are also in line with KASA’s 100-day target, such as drafting the legal framework on the National Climate Change Law, as well as formulating the basic structure of the National GHG Inventory Centre. KASA will also strive to launch initiatives that promote the circular economy, namely the Plastic Sustainability Roadmap, and focusing on employment in the green economy from the launch of the Green Jobs Portal.
    
    
22. Complementing KASA’s efforts is a stronger emphasis by MOF in pursuing the green agenda. Beginning with Budget 2021, we have mapped our budget initiatives to the Sustainable Development Goals (SDGs), allowing us to better match the national landscape of financing programmes with projects related to the SDGs.
    
    
23. As a result, we are amongst the 10 countries in the world which have fully aligned our national budget to the SDGs based on United Nation’s assessment. Based on this progress, such exercise will be further improved in Budget 2022 which focuses on Recovery, Resilience and Reform.
    
    
24. This will anchor and drive several initiatives of the Twelfth Malaysia Plan, which is to be tabled soon. The plan will build on what was achieved from the 11th Malaysian Plan – where over 7.2 billion ringgit was allocated to enhance climate resilience and adaptation measures. This is particularly to support the sustainability agenda, while also focusing on growth and inclusivity.
    
    
25. Alhamdulillah, we have also successfully issued the world’s first sovereign US Dollar Sustainability Sukuk, as well as the first fully digital Sukuk Prihatin with a special focus on social aspects. Further reinforcing the MOF’s commitment towards climate change include:
    
    
    • Establishing an Integrated National Financing Framework;
    • Leading the Working Group on Finance for Sustainable Development under the national-level SDG Steering Committee;
    • Developing a more complete, unified and explicit framework for sustainable finance through the development of a Sustainable Finance Roadmap; and
    • Finalising the establishment of the MySDG Trust Fund to complement the development allocation towards the SDGs in order to meet any financing gaps.

 TRANSITIONING TO NET ZERO AND BEYOND

Ladies and gentlemen,

26. In transitioning to a climate resilient economy, no Government is in a position to do all the heavy lifting on its own. The additional fiscal pressure is expected to be immense due to the cost of transition.
    
    
27. In fact, climate experts have already started the conversation on net-negative emissions as reaching net zero alone will no longer be enough. This entails reducing emissions in-house as much as possible, including carbon capture through both nature-based solutions and ‘negative emissions’ technologies.
    
    
28. Therefore, it is important that we start immediately, as the urgency is no longer rhetoric. Both public and private sectors must work together to ensure an equitable and rapid transition to a net zero carbon economy.
    
    
29. For businesses, climate change poses significant risks to profitability. In addition, as people become more attuned to the environment, social and governance (or ESG) concerns, consumerism and investor activism are based on not just what a business sells but also how it operates. This is further reflected in a survey done by the Economist last year, which showed that 87 per cent of young investors believe corporate success should be measured by more than financial performance.
    
    
30. To that end, I laud efforts made by Bursa Malaysia on introducing requirements on sustainability reporting for listed companies. I would like to reiterate the importance for businesses to start accounting for the value of ESG in their operations, and hold suppliers and trading partners to the same standards.
    
    
31. This is also where the tone from the top in the form of bold and transformative business leadership is very much needed – not only to address these challenges, but also to shape a sustainable future. It is in this spirit that the CEO Action Network was established, to accelerate sustainable business practices and lead by example.
    
    
32. In this regard, the financial sector has an important role to play in accelerating the adoption of sustainable business practices by prioritising financing in such areas. At a global level, it is encouraging to see that more than 45 per cent of the global banking industry, including CIMB Group, have signed up to the UN Principles for Responsible Banking. Out of these, 55 of them have formed a Net-Zero Banking Alliance, with firm plans to fully decarbonise their loan books. I urge more financial institutions to follow suit, and be part of this global commitment.
    
    
33. Next is the joint effort between Bank Negara, Securities Commission and the industry via the Joint Committee on Climate Change (or JC3), which has since gained much ground especially on disclosure requirements and taxonomy. These initiatives are crucial in ensuring transparency of climate-related financial risks, allowing investors and stakeholders to make informed decisions.
    
    
34. As for Sovereign Wealth Funds (or SWFs) and institutional investors, being signatories to the UN Principles for Responsible Investment means pledging more to commitments to sustainable investments. One such initiative which is under the ambit of the PERKUKUH Pelaburan Rakyat initiative is the Employees’ Provident Fund (or EPF)’s Green Investing Opt-in Funds. Moving forward, I hope to see our SWFs and institutional investors be part of the Net-Zero Asset Owners Alliance, working towards portfolio emissions reduction targets. These will push their investee companies to also head in this direction.
    
    
35. All these efforts will pave the way towards creating a more encompassing sustainable finance industry in Malaysia. I look forward to hearing more about such initiatives in next year’s TCE Summit.

CONCLUSION

Ladies and gentlemen,

36. As highlighted in the recent IPCC Report, the climate crises have grown beyond the choices that individuals make – worsened by human activities which have damaged the planet at an alarming rate.
    
    
37. We must face this threat squarely in the face: humanity’s long-term survival is at stake, and it takes more than just telling people to use less paper or to recycle more often. This is about getting our businesses and the Government to take decisive actions for our own survivability.
    
    
38. As fittingly said by Robert Swan – the first person in history to walk to both the North and South Poles, and a strong advocate for the protection of Antarctica and renewable energy, “The greatest threat to our planet is the belief that someone else will save it”.
    
    
39. Therefore, I call upon the private and public sectors, and all present to act, and act now. The time to decisively address humankind’s greatest challenge is now, and we must do it with courage and boldness. The right to clean air and a liveable climate are absolute to any human being.
    
    
40. On that note, I would like to thank CIMB again for inviting me, and for successfully organising this event. I understand that prominent corporate leaders from the region and international thought leaders such as Sir. Jonathon Porritt will be speaking at the Summit. I also look forward to hearing about the progress made by the CEO Action Network. 41. With great pleasure and hope for the future of our planet and humanity, I now officiate this event, and I wish everyone a productive Summit ahead, thank you.