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 59 58 ENVIRONMENTAL STEWARDSHIP CLIMATE IMPACT WHY IT MATTERS Upholding environmental stewardship is essential for preserving resources and reducing environmental impacts. Implementing energy efficiency practices not only reduces operational costs but also lowers GHG emissions, supporting global efforts to combat climate change. This aligns with the ASEAN Climate Change Strategic Action Plan (“ACCSAP”) 2025-2030, which serves as the roadmap for addressing climate change in the ASEAN region up to 2030. Additionally, optimising water resource management is vital for conserving water, especially in areas facing scarcity. Promoting sustainability through educational programmes and policy advocacy is crucial for driving societal change. Recognising its importance, we remain focused on facilitating the shift towards a low-carbon economy. In line with national aspirations and the Paris Agreement, the Group aims to achieve net-zero emissions by 2050. Governance The Group’s climate risk management is integrated into its broader risk governance framework, ensuring effective oversight and accountability. Climate-related risks are managed through a structured governance approach, involving the Board of Directors, relevant Board and Management Committees, Business Units, and Group Risk Management. Each of these bodies plays a defined role in assessing, monitoring, and mitigating climate risks, ensuring alignment with the Group’s strategic objectives and regulatory requirements. The Board Charter and Terms of Reference (“TOR”) for key Board Committees—including the Group Governance, Nominations and Compensation Committee, Audit Committee, and Group Board Risk Committee—as well as the Group Risk Committee at the management level, elaborates on their respective responsibilities in relation to climate risk management. The key responsibilities of these governance bodies are outlined as follows: Board and Management Committees Roles & Responsibilities Board of Directors (“Board”) Oversees climate risk management initiatives and is responsible for ensuring that climate risks are well incorporated across our governance process, strategy, and business operations. Group Board Risk Committee (“GBRC”) Supports the Board in its supervisory role, overseeing all aspects of risk management throughout the Group, including climate risk management. Audit Committee (“AC”) Supports the Board in overseeing sustainability and climate risk management processes, including the Group’s internal control system to ensure compliance with statutory and regulatory requirements. Group Governance, Nomination and Compensation (“GNC”) Functions as an independent Board Committee to support the Board in providing oversight on material sustainability risks, including climate-related risks, particularly to ensure sustainability governance within Kenanga and facilitate alignment and compliance with applicable statutory and regulatory requirements. Group Sustainability Management Committee (“GSMC”) Supports the governance and implementation of sustainability matters, providing oversight and input to ensure that the Group’s strategies, policies, goals, programmes, and initiatives related to sustainability matters are aligned with the Group’s commitment towards sustainability. Group Risk Committee (“GRC”) Provides risk management oversight for the Group, including reviewing and recommending frameworks, policies, processes and procedures, as well as evaluating climate risk-related propositions from Group Risk Management, Business Units or support units within the Group. Group Credit Committee (“GCC”) Oversees the climate risk profiles and asset quality in ensuring that the climate risks undertaken are within prescribed levels. Separately, the GCC reviews the policies and procedures related to climate risk activities before submitting them to the GRC for endorsement. Delivery and Business Units Group Risk Management (“GRM”) Oversees all aspects of risk, including credit risk, market and liquidity risk, operational risk, technology risk, climate risk, and any other relevant risks within the Group. The GRM develops frameworks to integrate climate-related risks into governance processes, business strategies and operations. In addition, it conducts independent assessments of appraisals made by the Business Units from a climate risk perspective, carries out climate risk scenario analyses and stress-testing exercises, analyses data and provides relevant reports to the GRC, GBRC and Board. The GRM also offers advisory support to the Business Units on climate-related matters. Business Units The Head of the relevant division/department/business unit ensures alignment of business strategies with the Group’s climate risk objectives, conducts climate risk assessments in financing or investment proposals, applies climate risk insights to define target markets, and exercise due diligence to avoid supporting activities that may negatively impact climate change. ENVIRONMENTAL STEWARDSHIP OUR APPROACH Our strategy for managing climate impact is grounded in practicality, focusing on addressing climate-related risks within our business activities, products, and services, while striving to reduce the negative environmental footprint of our operations. We aim to reduce our operational GHG emissions where possible and minimise wastage throughout our value chain to lessen their adverse impacts on the ecosystem and biodiversity. Our vendors are also expected to embrace sustainable business practices as guided by our Group Code of Conduct for Vendors and are subjected to the newly introduced ESG due diligence as part of onboarding process, reflecting our ongoing commitment to sustainability. Additionally, our internal policies, such as the Climate Change Risk Management Framework and Group Sustainability Policy, further guide our actions and decision-making processes in managing environmental impact. We also encourage our employees to use resources responsibly, including electricity, water, and paper. To further foster an eco-conscious culture, we held interactive activities under the #GreenAtWork initiative, aims to raise employees’ awareness and encourage the adoption of environmentally friendly practices. Recognising the importance of engaging our clients in sustainability efforts, we actively promote eco-friendly practices and offer products and services that support environmental stewardship. By collaborating with our clients, we strive to create a positive environmental impact together. Managing Our Climate Risks Climate risks affect financial institutions and the broader business ecosystem through physical and transition-related challenges. Physical risks, such as extreme weather events and natural disasters, can disrupt operations and damage assets. Transition risks, including policy changes and shifting market expectations, can influence investment decisions and asset values. These risks impact financial stability, supply chains, and overall economic resilience. At Kenanga, we integrate climate risks into our risk management framework to safeguard investments and enhance resilience. Our climate-related disclosures align with the recommendations of the Taskforce on Climate-related Financial Disclosures (“TCFD”), a globally recognised framework for reporting climate risks. This approach is in accordance with the Policy Document on Climate Risk Management and Scenario Analysis (“CRMSA”) issued by Bank Negara Malaysia, which provides financial institutions with a structured framework to enhance the reliability, consistency, and comparability of climate-related disclosures. Guided by the CRMSA, we aim to equip stakeholders with transparent and decision-useful insights into climate risks and opportunities. Additionally, we continue to enhance our climate risk management and reporting by aligning with the IFRS S2 standards as early adopters. This approach ensures we remain aligned with industry best practices and evolving regulatory and stakeholder expectations for climate-related financial disclosures.
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