Our Commitment to Address Climate Change
We recognise the role of the financial sector in support of Malaysia to achieve its Nationally Determined Contribution (NDC) aligned to the 2015 Paris Agreement goals to limit the global temperature increase to 2 degrees Celcius and we are committed to contribute towards Bank Negara Malaysia’s (BNM) Financial Sector Blueprint 2022 – 2026 to facilitate a just and orderly transition to a greener and low carbon economy. As a responsible member of the industry, we remain fully committed to doing our part to promote sustainability and reduce our environmental footprint. To ensure that our operations are aligned with global sustainability goals, we are continuously enhancing our policies and procedures to be more ESG-focused. We have also begun assessing our climate-related risks and opportunities, and will continue to progressively build capacity to align with international best practices moving forward. This will enable us to better measure and manage the environmental impacts of our business activities.
As part of enhancing transparency and engagement with our stakeholders on our response to climate change, we are progressively adopting the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) starting 2022.
An overview of our climate action is as follows:
- Within ABMB, sustainability and climate-related matters are governed through our sustainability governance structure, which stipulates accountabilities at the Board, management and working-levels within the Bank. The Board sets the tone from the top and oversees sustainability and climate-related strategies, policies and processes. The Group Sustainability Committee (GSC) and Group Risk Management Committee (GRMC) are responsible Board-level committees to provide oversight on climate-related risk management. The full details regarding our sustainability and climate-related governance arrangements are detailed in the Sustainability Governance tab or our FY23 Annual Report.
- To ensure the Bank’s sustainability goals are achieved, we have incorporated the sustainability topline goals into specific targets and KPIs into the scorecard of the GCEO and Senior Management, which are cascaded down to relevant levels of management. The executive remuneration structure takes into consideration the Bank’s performance of its sustainability and climate-related goals through short-term incentive bonus funding at the group, division and individual levels. The long-term incentive plan incorporating the Bank’s key sustainability and climate-related goals is under review.
- To reiterate our commitment to mitigate climate change, we participate in the following committees as active members and contributors to take action in accelerating the nation’s sustainability agenda:
- Joint Committee on Climate Change (JC3) Sub-Committee 1 – Risk Management, which was established to pursue collaborative action for building climate resilience within the Malaysian financial sector. The Sub-Committee focuses on risk management by facilitating development of climate-related prudential standards and risk management policy, as well as to formulate responses to climate-related issues and risks. The Bank is represented by Alliance Bank’s Head of Sustainability and Head Group Climate and Sustainability Risk.
- The Bank is also part of the Climate Change and Principle-based Taxonomy Implementation Group (“CCPT IG”) which serves as an industry collaborative platform to share progress of CCPT implementation and facilitate technical experiences and discussions related to the application of CCPT Guidance document. The CCPT IG facilitates the identification and remediation of implementation issues with the aim to promote consistent application of CCPT across the industry. The Bank is represented by Alliance Bank’s Head of Sustainability and Head Group Climate and Sustainability Risk.
- The Bank is also currently involved in the JC3 SME Focus Group and is being represented by the Chief Executive Officer of Alliance Islamic Bank and Group Chief Strategy, Marketing & Business Development Officer. The Bank is actively involved by serving as the Focus Group’s Awareness Subgroup Lead, represented by Alliance Bank's Head of Sustainability, which entails leading the subgroup to develop and execute relevant strategies, action plans and deliverables to promote climate awareness amongst SMEs.
- We have also become a member of United Nations Global Compact in September 2022. As a member of UNGC, the Bank is committed to uphold, promote and implement the Ten Principles of the United Nations Global Compact relating to human rights, labour, environment and anti-corruption:
|We support and respect the protection of internationally proclaimed human rights.
|We ensure that we are not complicit in human rights abuses.
|We uphold the freedom of association and the effective recognition of the right to collective bargaining.
|We support the elimination of all forms of forced and compulsory labour.
|We support the effective abolition of child labour.
|We support the elimination of discrimination in respect of employment and occupation.
|We support a precautionary approach to environmental challenges.
|We aim to undertake initiatives to promote greater environmental responsibility.
|We encourage the development and diffusion of environmentally friendly technologies.
|We work against corruption in all its forms, including extortion and bribery.
- As a member of the Association of Banks Malaysia (ABM) and ABM ESG Committee, we are also committed to adopt their seven ESG Principles which aims to support Malaysia’s NDC in accordance with the United Nations Framework Convention on Climate Change (UNFCCC). These seven ESG Principles are also aligned with our Sustainability Strategy Framework:
|We commit to achieve Carbon Net Zero across our entire business and financed customer portfolio.
|We commit to incorporate ESG into our governance and risk management approach.
|We commit to identify, mitigate & manage risks of modern slavery and human rights risk across our supply chain.
|We commit to support financing for Agribusiness customers.
|We commit to encourage sustainable practices within the high impact industry sectors for ESG.
|We commit to social & financial inclusion to ensure a sustainable future.
|We commit to report publicly on our ESG practices and progress in achieving these commitments.
- As part of our efforts to comply with Bank Negara Malaysia’s (BNM) Policy Document Climate Risk Management and Scenario Analysis (CRMSA), we are working to set a clear strategy in relation to our climate-related risks and opportunities.
- Climate-related risks and opportunities are presently incorporated into our sustainability strategy framework through our topline goals including Topline Goal 1, which seeks to increase our sustainable banking business covering financing of climate mitigation and climate adaptation activities. The Bank has also recently developed and adopted its Sustainable Product Framework (SPF), which seeks to define the scope of sustainable banking business at the Bank. The SPF will assist in the development of sustainable financing products, programs, and offerings in support of climate-supporting activities and activities meeting defined environmental, social, and transition criteria.
- The full details regarding our climate-related initiatives are detailed in our FY23 Annual Report.
- Recognising climate change as a significant risk to the Bank, we are working to enhance our risk management practices in relation to our climate-related risks and opportunities in line with Bank Negara Malaysia’s (BNM) Policy Document Climate Risk Management and Scenario Analysis (CRMSA). This includes identifying our climate-related risks and opportunities.
- The latest developments in climate risk management within the Bank include the following:
- Effective 1 April 2023, a dedicated Group Climate & Sustainability Risk Department has been established within the Group Risk Management function to build infrastructure and capacity to manage climate-related and sustainability risks in the operations and risk taking activities.
- We have incorporated climate-related risk in the risk management frameworks and processes of credit risk, market risk and operational risk to ensure our exposures to climate-related risks and their transmission to other risk types are appropriately identified and dealt with.
- Climate-related risks have been included in the Bank’s Internal Capital Adequacy Assessment Process (ICAAP) wherein climate-related risk exposures and impact to the portfolio of the Group and entities is assessed at least annually to determine whether additional capital should be set aside. We have also set climate and ESG related Risk Appetite Statements (RAS) Key Risk Indicators (KRIs) and Metrics to monitor the risk levels as monitoring measures, management actions will be taken if the risk thresholds are triggered.
- Climate-related risk management requirements have been incorporated into the Bank’s Policy on Outsourcing. On-boarding and periodic review of outsourced service providers are subject to review of climate-related risks and mitigations, to ensure that services can be continued without major disruption under climate-related events. This includes information technology services
- We have also incorporated climate and sustainability risk considerations into our overall Risk Management Framework, Sustainability Framework, ESG Screener Checklist and Risk Acceptance Criteria User Guide, Credit Risk Management Framework, Operational Risk Management Framework and Market Risk Management Framework.
- Climate adaptation measures to mitigate physical risks have also been undertaken, specifically in the area of flood mitigation. In FY2023, we installed floodgates at three of our branches in Shah Alam, Kajang and Jalan Ipoh. It is also mandatory for our records management processes to incorporate flood prevention measures such as keeping records above ground level as well as installing flood barriers and early warning alarm systems.
- The full details regarding our climate-related risk management practices are detailed in our FY23 Annual Report.
Metrics and Targets
- We have established our operational greenhouse gas emissions (GHG) emissions baseline for FY2020, and tracked our emissions against this record for the past three years.
- The following table details our Scope 1, 2 and 3 GHG emissions in tCO2e resulting from all our business operations in Malaysia. We adhere to the GHG Protocol Corporate Standards in the calculations of emissions.
|GHG Emissions Scope
||GHG Emissions (tonne CO2 equivalent, tCO2e)
|Stationary and mobile combustion
(Other indirect Emissions)
|Business travel by land
|Total Operational Emissions
|Reduction in Scope 1 and Scope 2 emissions against FY2020 baseline
1 Organisational boundary: Covers for all operations in Malaysia
2 Consolidation approach: Operational control
3 Methodology: The collection and calculation of emission is guided by the Greenhouse Gas Protocol: Corporate Accounting and Reporting Standard with reference to ISO – 14064-1:2018 requirements.
4 Scope 1 Direct GHG Emissions: stationary combustion and mobile combustion
5 Scope 2 Indirect GHG Emissions: purchased electricity
6 Scope 3 Indirect GHG Emissions: business travel (land-based transportation)
7 Exclusion from reporting boundary: Scope 1 – fugitive emissions (refrigerant leakages), Scope 3 – business air travel and employee commuting.
8 We have engaged an independent external consultant to conduct an independent verification of the GHG emissions reported for FY20-FY23. The review of data reported was carried out in reference to ISO14064-3:2019 - Specification with guidance for the validation and verification of greenhouse gas assertions. Refer to the Verification Report of Greenhouse Gas Inventory, click here.
- In a step towards reducing the Bank’s greenhouse gas (GHG) emissions footprint, we have established the following short- and long-term climate-related targets which are aligned to our commitments to the ABM:
|To reduce our Scope 1 and 2 by 20% by FY2027 against our FY2020 baseline1
||Achieve Carbon Net Zero by 20502
1 Target covers 91% of FY2020 baseline emissions across Alliance Bank Group’s operations in Malaysia. Target covers emissions from operations across Malaysia
2 The target of Carbon Net Zero by 2050 is aligned to ABM principles.
- We currently have a detailed GHG reduction strategy for our Scope 2 emissions, including actions such as reducing our floor space, replacing indoor and outdoor lightings, upgrading air conditioning units, and investing in carbon offsets where necessary.
- We have quantified our Scope 3 financed emissions for 8 high emitting sectors in our portfolio, and are developing a Net Zero Roadmap with short, medium and long term decarbonisation strategies to achieve the goal of being Carbon Net Zero by 2050.
- As part of our efforts to comply with Bank Negara Malaysia’s (BNM) Policy Document Climate Risk Management and Scenario Analysis (CRMSA), we are working to enhance our methodology in metrics and targets setting, to better assess and manage climate-related risks and opportunities.
- The full details regarding our emissions profile are detailed in our FY23 Annual Report.
Inspiring Our Customers
We provide customers with sustainability advisory support to help them adopt good ESG practices that will benefit their business and support their transition to sustainable business through our partnerships with Bursa Malaysia and the Malaysian Green Technology and Climate Change Corporation.
- We offer sustainability-linked products and services to encourage businesses to embrace ESG practices.
- We provide customers with sustainability advisory support to help businesses adopt good ESG practices that will benefit their business and support their transition to sustainable business.
To be more energy efficient, the Bank maintains an optimised temperature setting at its Computer Room Air-Conditioning and replaced low-efficiency split unit air conditioners at the branches. The Bank is also reducing energy consumption by progressively fitting LED lights at all its offices.
The table below discloses our Bank’s electricity energy consumption for the past four years:
|Electricity Consumption* (MWh)
Covers energy consumption across Alliance Bank Group’s operations in Malaysia.
The data was collected internally based on monthly utility bills. As part of our plan to continuously improve the measurement and disclosure of our energy data, our energy data for FY2020, 2021, 2022 and 2023 has been validated by independent external consultants according to ISO14064.
We install eco-friendly materials in all our office renovations. The materials we used comply with US-based Leadership in Energy & Environmental Design, UL Environment’s GREENGUARD Green Certified products, Australian-based GECA standards or equivalent certifications. Some of our split unit air conditioners use R410 refrigerant, a type of environmental friendly gas.
Our digitisation initiatives at the Bank enable us to reduce the use of paper in our offices. We continued to monitor the print volume through password control on the printers and send monthly reports to the respective heads of business for tracking purposes. In FY2022, our bank-wide print volume decreased by more than 7% YOY.
Launched in 2016, the EcoBiz Challenge is an environmental-themed competition in which tertiary students develop sustainable business solutions to address environmental, economic and social issues. The challenge promotes a culture of environmental conservation among university students through competitive learning platforms and collaboration with industry experts.
In FY2022, the Bank collaborated with the Malaysian Green Technology and Climate Change Corporation (“MGTC”) to launch the fourth season of the EcoBiz Challenge with the theme of “Inspiring Malaysia to be a Zero-Waste Nation”. This edition saw the participation of almost 500 students, who formed 138 teams, from various universities nationwide.
Since its inception, the Challenge has reached out to more than 5,000 students and garnered over 600 submissions from 157 universities across Malaysia.
For more information about the EcoBiz Challenge, please click here.