Climate stress test results can be used in various ways to manage the Bank’s climate risks effectively. These include identifying the source of risks from specific sectors and regions, assessing the application of funds based on stress test results, and encouraging boards to manage climate risks with a long-term strategic approach. Moreover, climate stress test results can provide valuable insights into a business’s vulnerabilities and inform the development of risk management and mitigation strategies. These results can then be incorporated into an institution’s risk management and risk appetite processes. By understanding climate stress test results, BIMB can identify risk exposure and the distribution of risks across industries, which can inform credit risk assessment and determine any additional capital allocation required after Capital Stress Testing. Outlook In 2023, we will roll out detailed sector guidelines and assessment criteria for sectors with elevated risk in terms of ESG and climate change. The Bank assesses new financing applications for ESG risks where there are elevated concerns on ESG based on industry-specific context. Key sectors where ESG due diligence would be carried out include largescale agriculture, oil & gas, forestry, large-scale manufacturing projects, large-scale residential and industrial developments, mining and quarrying, among others. The following are among the climate and ESG-related data for customers to provide at onboarding and origination: SME: Simplified reporting on 6 data points and 4 Yes/No questions. •• Policies •• Monitoring Systems •• Management Systems •• Labour Standards •• Compliance Commercial: Expanded reporting on all areas of Environment, Social and Governance. •• ESG Related Governance Structure & Policies •• Climate change management oversight and commitments •• ESG Disclosures and Reporting •• Business Plan/Strategy on reducing emissions •• Sustainability certifications •• Training programmes •• Health & Safety compliance •• Socio-economic benefits sharing •• Labour rights and standards •• Grievance mechanism •• Anti-corruption Corporate: Data obtained through referencing published reports (where available) on all areas of Environment, Social and Governance. Encourage PLC customers to disclose ESG and climate transition plans publicly and align with TCFD Recommendations: •• Climate risk as a material risk area •• Policies and commitments on climate and ESG •• Board & Senior Management roles in managing climate risk and ESG-linked remuneration •• Business Plan/Strategy on reducing emissions •• Low carbon transition plan i.e., net zero target/SBTi •• Environmental manuals/SOP •• Monitor and report on environmental performance •• Third-party verification of ESG-related policies, plans and disclosures •• Sustainability certifications •• Training programmes •• Health & Safety compliance •• Socio-economic benefits sharing •• Labour rights and standards •• Grievance mechanism •• Anti-corruption Sustainability Statement Bank Islam Malaysia Berhad 153 01 05 03 07 02 06 09 04 08
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