KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2024 BASIS OF THIS REPORT OUR APPROACH TO SUSTAINABILITY KENANGA AT A GLANCE GOOD GOVERNANCE LEADERSHIP STATEMENTS SUSTAINABLE ECONOMIC GROWTH ENVIRONMENTAL STEWARDSHIP EMPOWERING PEOPLE AND COMMUNITIES APPENDIX 43 42 RESPONSIBLE INVESTING SUSTAINABLE ECONOMIC GROWTH WHY IT MATTERS Investing in companies that are committed to sustainability enables us to create positive environmental and social impacts while building long-term value. It also enhances our ability to attract investors who prioritise business sustainability in their investment decisions. OUR APPROACH Our Investment Strategy Kenanga Investors Group (“Kenanga Investors” or “KIG”), comprising Kenanga Investors Berhad (“KIB”), Kenanga Islamic Investors Berhad (“KIIB”), and Eq8 Capital Sdn Bhd, is the Group’s asset and wealth management arm. In upholding responsible investing, Kenanga Investors works closely with investee companies, regulators, and a wide range of market players and stakeholders to integrate ESG considerations into our investment processes. Since 2017, Kenanga Investors has been a signatory to the Malaysian Code for Institutional Investors (“Code”), and has developed procedures that align with the Code’s principles across its investment value chain. In addition, KIG is a member of the Institutional Investors Council (“IIC”) and actively participates in the Joint Committee on Climate Change (“JC3”) and the Sustainable Investment Platform (“SIP”), reflecting our commitment to advancing the ESG agenda while addressing climate risks relevant to our sector. In November 2024, Kenanga Investors and KIIB were affirmed investment manager ratings (“IMR”) of IMR-2 by the Malaysian Rating Corporation Berhad for the 8th consecutive year since they were first rated in 2017. The rating reflects KIG’s well-established investment processes and sound risk management practices. As part of its commitment to continuously enhancing its sustainability strategy, KIG improved its ESG Framework in 2022 by integrating fixed-income asset class, in addition to equities. This was achieved through the establishment of an in-house ESG assessment framework to conduct positive screening for bonds and sukuk, based on independent and accredited external data sources. Comprehensive screenings for fixed-income securities, along with sector-specific assessments for equities, were completed in 2023, with an increased focus on sectors with elevated ESG risks. In 2024, Kenanga Investors further strengthened its ESG Framework by integrating Climate Scenario Analysis to assess the resilience of investment portfolios against potential adverse climate conditions, including physical and transition risks. As of December 2024, KIB’s ESG-screened assets under management (“AUM”) amounted to approximately RM12 billion, which is 51% of its reported AUM. To effectively manage and monitor risks, KIG integrated into its ESG risk assessment various factors and indicators specific to respective industries, such as palm oil, oil and gas, banking and finance, power, and mining, enabling a more holistic perspective. This led to the development of strategies that include ESG screening procedures, participation in active stewardship through engagement with stakeholders, and the exercise of voting rights in investee companies. Additionally, in 2024, KIG successfully secured significant AUM for ESG mandates from Malaysian public asset owners, reflecting the strength of our expertise and reinforcing our position as a trusted fund manager in the sustainability space. SUSTAINABLE ECONOMIC GROWTH KIB’s ESG Integration Strategy Positive Screening • Integrate ESG factors into investment analysis and decision-making processes • Invest in companies that meet our ESG standards Negative Screening • Avoid investing in companies with unsatisfactory ESG performances • Exclude industries that do not align with our ESG core values from investment consideration, such as controversial weapons and adult entertainment Voting Rights • Exercise our voting rights in investee companies with substantial holdings, as per our voting policy • Serve as a formal channel to communicate and relate our views to investee companies, especially on ESG-related issues • Encompass significant resolutions such as the appointment of auditors and board of directors, proxy contests, anti-takeover provisions, corporate governance matters, capital structure decisions including mergers and acquisitions, and executive compensation Active Engagement • Actively engage with stakeholders across the industry and investee companies to monitor and promote good ESG practices Pre-Investment • Stock selection based on ESG assessment conducted via positive and negative screening Post-Investment • Continuous ESG monitoring and review • Exercise active ownership through voting and engagement to ensure continued ESG alignment Divestment • Divest stocks that are not aligned with our ESG values ESG Integration Throughout Investment Life Cycle
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