KENANGA INVESTMENT BANK BERHAD INTEGRATED ANNUAL REPORT 2024 WE ARE KENANGA OUR SUSTAINABILITY APPROACH LEADERSHIP STATEMENT HOW WE ARE GOVERNED FINANCIAL STATEMENTS SHAREHOLDERS’ INFORMATION ADDITIONAL INFORMATION OUR VALUE CREATION APPROACH 111 110 CORPORATE GOVERNANCE OVERVIEW STATEMENT CORPORATE GOVERNANCE OVERVIEW STATEMENT Sustainability Plan In embarking on its sustainability journey, on 13 September 2021, a Sustainability Plan was presented to the GSMC to outline the Group’s key sustainability priorities, which was later tabled at the GNC and approved by the Board of KIBB on 28 October 2021. Sustainability Pillar Material Matters Sustainable Economic Growth • Responsible Investment • Digitalisation Environmental Stewardship • Climate Impact Empowering People and Communities • Diversity, Inclusion and Well-Being • Community Investment Corporate Governance • Good Business Conduct Double Materiality Assessment In 2024, we conducted our first double materiality assessment to meet evolving sustainability reporting standards and manage stakeholder expectations in line with the implementation of National Sustainability Reporting Framework. This assessment provided an overview of our business impact towards the environment and society and identified sustainability risks and opportunities that may influence our financial performance. Further, based on the outcomes of the Double Materiality Assessment, the GSMC, through the GNC, recommended the refreshed ESG Framework and material matters to the KIBB Board for endorsement. These updates are intended to better inform and support the execution of the Group’s sustainability strategy. Updated Kenanga ESG Framework The updated ESG Framework provides strategic direction for the Group’s sustainability initiatives, including the setting of priorities, targets, and performance management across the organisation. It is anchored on four sustainability pillars and reflects a refreshed set of material matters. Following a comprehensive Double Materiality Assessment, 13 material matters were identified as most significant to the Group and its stakeholders. This assessment also introduced two new topics: Financial Inclusion and Risk Management. Financial Inclusion underscores Kenanga Group’s commitment To support the implementation of the Sustainability Roadmap, relevant ESG KPIs were further strengthened and integrated into the Balanced Scorecards of respective employees to track and monitor ESG performance. Additionally, following the update of the sustainability goals and targets, Group Human Resources introduced Individual Development Plans (“IDPs”) to enhance ESG-related competencies among employees in relevant roles. These IDPs aim to equip personnel with the skills, knowledge, and mindset required to drive the Group’s ESG agenda while fostering a culture of continuous learning. Kenanga Group Climate Risk Management On 9 December 2021, the Board had approved Kenanga Group’s Climate Change Risk Management Framework (“CCRM Framework”) to incorporate climate risk management expectations from the regulators, and the broader market. The Framework outlines key principles, governance structures, best practices, Climate Change Principles Based Taxonomy (“CCPT”) classifications, and the Group’s risk appetite. This framework provides guidance on Kenanga Group’s approach to managing climate change-related risks and it serves as a comprehensive reference for integrating climate considerations into the Group’s governance processes, business strategy and operations, risk management system, as well as reporting and disclosure practices. To ensure effective implementation of the frameworks, a robust government structure which involves the Board, Board Committees, Management Committees, Business Units and Group Risk Management was established. DIRECTORS’ RESPONSIBILITY STATEMENT IN RESPECT OF THE PREPARATION OF THE AUDITED FINANCIAL STATEMENTS (Pursuant to Paragraph 15.26(a) of the MMLR) The Board is fully accountable for ensuring that the Audited Financial Statements are prepared in accordance with the Companies Act 2016 and the applicable approved accounting standards set out by the Malaysian Accounting Standards Board so as to present a true and fair view of the state of affairs of the Group and of the profit and loss and cash flow as at the end of the accounting period. In preparing the Audited Financial Statements, the Directors are satisfied that the applicable approved accounting standards in Malaysia have been complied with reasonable and prudent judgment and estimates have been made. The Audited Financial Statements are also prepared on a going concern basis, as the Board has a reasonable expectation, after having made enquiries that the Group has adequate resources, to continue its operational existence in the foreseeable future. The CCRM Framework was updated in 2023, to align it with BNM’s Policy Document on Climate Risk Management and Scenario Analysis issued in November 2022, and again in 2024 to incorporate updates on BNM’s FAQs and Due Diligence Questions on CCPT classification. As the climate policy landscape continues to shift, the framework will be updated accordingly to remain aligned with applicable regulations and strategic drivers. In 2024, the Group embarked on the pursuit of the Climate Risk Scenario Analysis and Stress Testing (“CRST”) exercise as planned. For this, the Group has completed the CRST in January 2025. The CRST exercise, which aim to identify the potential risks and vulnerabilities affected by the change in climate environment, takes into accounts the 3 NGFS scenarios. The Group shall leverage on this CRST results to develop appropriate and resilient strategies. The Group has also conducted a baseline assessment of its Scope 3, Category 15 emissions (financed and facilitated emissions), covering both on- and off-balance sheet activities. The outcomes of these exercises were presented to the Group Board Risk Committee and the Group Sustainability Management Committee by Group Risk Management and Group Marketing, Communications and Sustainability, respectively, to support the integration of climate risk insights into the Group’s broader sustainability management and strategic planning. to enhancing access to financial services, fostering inclusive economic development, and advancing social equity. Risk Management highlights the importance of proactively addressing market, credit, and climate-related risks to safeguard client interests and support long-term organisational resilience. Below are the updated Material Matters: Sustainability Pillar Updated Material Matters Good Governance • Good Business Conduct • Risk Management • Regulatory Compliance Sustainable Economic Growth • Responsible Investment • Digitalisation • Cyber Security • Client Experience Environmental Stewardship • Climate Impact Empowering People and Communities • Diversity and Inclusion • Employee Safety, Health and Wellbeing • Talent Attraction, Development and Management • Community Investment • Financial Inclusion Kenanga Group’s Sustainability Goals and Targets, Sustainability Roadmap 2023-2025 In April 2022, guided by the Group’s ESG Framework and Sustainability Plan, the Group Sustainability Goals and Targets were presented to the GSMC by Group Marketing, Communications & Sustainability. The goals and targets, which outlined the Group’s sustainability ambitions, were subsequently approved by the Board of KIBB on 6 April 2022, upon the recommendation of the GNC. Later, on 7 December 2022, the Board approved the Group Sustainability Roadmap 2023–2025, following recommendations from both the GSMC and the GNC. The Roadmap serves as a strategic guide to implementing the Group’s sustainability goals and targets. In 2024, the Group’s sustainability goals and targets were reviewed to assess their continued relevance and progress. As a result of this review, the Board approved a refreshed set of goals and targets to better align with national sustainability priorities and the evolving expectations of stakeholders.
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