CIMB Group Holdings Bhd

Aligning Lobbying Activities with **1.5°C**

As members of international and local working groups and through our work with regulators and industry, we advocate for national and company level emission reduction plans to achieve net zero in line with the Paris Agreement. We endeavour to ensure that any lobbying activities relevant to climate policy is consistent with our stated objectives in delivering the ambition of the Paris Agreement.

In the event of any misalignment between a trade association's lobbying activities and the goals of the Paris Agreement, CIMB's position is to actively advocate for the goals of the Paris Agreement. Where misalignments persist we will enact our escalation process which entails engaging with said association with a clear timeline for actions be taken, or if unsuccessful we may issue a public statement distancing CIMB from the misalignment, or leave the trade association.

Sustainability efforts at CIMB are driven by the Group Sustainability division and governed by the Group Sustainability Council and Group Transformation Council, comprising of senior members of management from across the Group with well-defined responsibilities for driving progress on various sustainability KPIs. The Board has ultimate accountability for sustainability and sustainability risk, including overseeing the development and implementation of a sustainability framework for the Group. A Group Sustainability and Governance Committee (GSGC) was formalised in September 2021 to provide greater oversight and stewardship over the Group's sustainability opportunities and risks. The GSGC also assists the Board in advocating and fostering a culture/DNA of sustainability, ethical conduct, and integrity across the Group. [...] All high sustainability risk cases require approval by the relevant approving authority within the Business Unit (Wholesale or Commercial Banking). In cases where there is non-concurrence in the recommendation between the approving authority and Group Sustainability, the decision is escalated ultimately to the Group Executive Committee (GEXCO), chaired by the Group CEO. GEXCO has the discretion to further escalate the decision to the Board or the Group Sustainability and Governance Committee (GSGC) for final approval.

#### BOARD AND MANAGEMENT OVERSIGHT

In the context of climate governance, the Board is responsible for overseeing the management of climate-related matters. The Board is assisted primarily by the GSGC, a board sub-committee which was established in 2021. The Board is also supported by BRCC on climate risk appetite setting and management practices, AC on ensuring adequate internal control against climate risks, and the GNRC on Board-level climate competency, among others. Refer to page 77 of this report for further details.

Chaired by the Group Chief Sustainability Officer and comprised of regional and crossfunctional representatives, the GSC is responsible for formulating and monitoring, among others, the Group's climate change strategy, action plans, projects and initiatives, in line with the direction set by the GTC and the Board.

Key climate-related matters addressed at various board- and management-level committee meetings in 2021 included the following, which are discussed either as a standalone topic, or as part of a broader discourse on related topics:

The Group's strengthened sustainability commitments including net zero targets and plan, and our GSSIPS commitments

Appetite for and exposure to high sustainability risk sectors and clients

Key sector requirements and policies, such as No Deforestation, No Peat, No Exploitation (NDPE) requirements

The Group's Sustainability Risk Management Framework

Updates on climate-related regulatory developments and trends

Progress on ongoing and planned climate-related risk projects including CCPT implementation in Malaysia, scenario analysis pilot, and financed emissions baselining

**Meeting** **Climate-** **frequency** **related**

#### Board-Level Forums discussions

Group Board Bi-monthly 2

Group Sustainability and Governance Committee Quarterly 1[^

Board Risk and Compliance Committee Quarterly 1

Audit Committee Quarterly 1

Group Nomination and Remuneration Committee As required 2

#### Management-Level Forums

Group Transformation Committee Monthly 5

Group Sustainability Council Bi-monthly 5

^ Only one meeting was held as the committee was only set up in September 2021.

###### Governance and Risk

GOVERNANCE OF SUSTAINABILITY

Sustainability is institutionalised in our
business through our Sustainability
Governance Framework. The framework is
designed with a clear delineation of roles
and responsibilities that ensures
accountability, transparency and effective
execution of our sustainability decisions.

The Group Sustainability and Governance
Committee (GSGC) convenes every quarter
and assists the Board in fulfilling its
responsibilities in advocating and fostering a
culture that prioritises ethical conduct,
integrity and responsibility towards people
and planet. The GSGC provides oversight,
advice and direction on the development
and implementation of strategies,
frameworks and policies for all of our
material matters including but not limited to
climate change and financial inclusion. The
committee also oversees the management
of bribery, corruption and other related
risks. The Board Risk and Compliance
Committee, Audit Committee, and Group
Nomination and Remuneration Committee
provide oversight of sustainability matters
within the domain of their respective
committees.

The Board is the highest governance body
accountable for CIMB's sustainability
strategy, material ESG issues, as well as
opportunities and risks.

The Group Sustainability Council (GSC) is
the management committee with
representation from various business
units and is responsible for monitoring the sustainability risk profile of the Group's business activities and ensuring the implementation of
appropriate sustainability policies, procedures and controls. The GSC reports to the Group Transformation Committee which assists the
Group CEO in steering CIMB's overall strategy including sustainability. The Group Sustainability department was established in 2019 to
operationalise sustainability and comprises Centres of Excellence as depicted in the diagram which includes a Governance and Risk Unit. Our
diverse regional business requires localised sustainability solutions and this is delivered through our Country Sustainability Teams.

| Governance of Sustainability

Since 2022, we have implemented the Integrated Sustainability Operating Model (ISOM) in Malaysia to scale up and mainstream the Group's
sustainability efforts. The ISOM model allows for a decentralised approach to ramp up sustainability innovation and embed sustainability
culture, values and accountability across the Group. In 2023, we expanded this model to Indonesia, Singapore, Thailand and Cambodia
whereby full-time sustainability specialists and part-time champions were appointed within business units and enabling functions to drive
sustainable finance and practices at the forefront.

**Group Board of Directors**

**Group Transformation**

**Group** **Board Risk** **Group** **Group Chief Executive Officer (GCEO)** **Committee**

**Audit** **Nomination** **and** **Sustainability** **(Chair: GCEO)**

**and** **and**

**Committee** **Compliance**

**Remuneration** **Governance** **Group Chief Operating & People Officer** **Board of Trustees**

**Committee**

**Committee** **Committee** **(GCOPO)**

**Group Sustainability**

**Group Chief Sustainability Officer** **Council** **CEO, CIMB Foundation**

_Regional_ **(Chair: GCOPO)**
_Specialist/Champion_

**Head of** **Country Teams** **Centres of Excellence** **Head, Corporate**
**Business Unit/Business Enabler** **Responsibility**

**Head, Sustainability MY** **Head, Sustainability Strategy**

**• Community Investment**

**• Digital Communications**

**Business Units/Business Enabler** **Head, Sustainability ID** **Head, Net Zero Operations** **(Website and Social**
**Media)**
**Sustainability Specialists and** **Head, Sustainability SG** **Head, Sustainable Finance** **• Finance, Governance Risk**
**Champions** _Specialist/Country_ **Head, Sustainability TH** **Head, Sustainable Finance Risk**
_Champion_ **Management**

**Head, Sustainability KH**

**Head, Sustainability Governance**
**and Risk Control Unit**

**Head, Stakeholder Engagement**

_Business Unit/Business Enabler_ **and Advocacy**
_Divisions_ _Sustainability_ _Corporate Responsibility MY_

--NEW-PAGE--

###### SUSTAINABILITY LINKAGES TO PAY

Our commitment to sustainability is evidenced by the fact that our Group CEO, top
management and all divisions have sustainability key performance indicators (KPIs) in their
collective scorecards. Collective scorecards are a team-based performance appraisal system
whereby employees are assessed as part of a collective team rather than only as individuals.
The KPIs in these collective scorecards reflect our material matters, and their performance
against these KPIs are directly linked to the funding of the bonus pool of all divisions,
thereby directly impacting the compensation of the executive management and employees
in the division.

Examples of sustainability KPIs include the mobilisation of sustainable finance through CIMB's
Green, Social, Sustainable Impact Products and Services (GSSIPS) framework for retail and
non-retail clients, completion of basic sustainability due diligence within specific turnaround
time and meeting quality parameters, reduction of GHG Scope 1 and 2 emissions by division
and country against the 2019 baseline, training on sustainability, achievement of financial
literacy and financial health targets, human capital development, improvement on diversity and
inclusion and implementation of initiatives toward delivering a sustainable supply chain.

For the Group as a whole, we measure our sustainability performance against a corporatelevel scorecard containing KPIs that must be achieved within pre-determined timeframes
as guided by our sustainability objectives. The scorecard is used to assess and report
progress to our governing committees.

###### SUSTAINABILITY POLICIES

###### SUSTAINABLE AND RESPONSIBLE FINANCE: MANAGING ENVIRONMENTAL & SOCIAL RISKS IN NON-RETAIL FINANCING AND CAPITAL RAISING TRANSACTIONS

As an organisation that is committed to sustainable finance, we are cognisant that our
environmental and social (E&S) risks and impacts extend beyond our banking operations to
the products and services provided to our clients. Future-proofing our clients will also
ensure CIMB's resilience and continued performance. As such, we collaborate closely with
our clients to manage and mitigate their E&S risks, encouraging a shift towards resilient and
sustainable business models.

In our commitment to advancing E&S risk management in the financial sector, CIMB Islamic
actively contributed to the development of the Value-based Intermediation Financing and
Investment Impact Assessment Framework (VIBAF) Sectoral Guide for Agriculture, Forestry
and Fishing. These initiatives aim to protect our customers and business while minimising
E&S risks across the industry.

###### SUSTAINABLE FINANCING FRAMEWORK AND POLICY

The Group Sustainable Financing Policy (GSFP) governs the handling of E&S risks in nonretail financing and capital-raising transactions. It is complemented by our Sustainable
Finance Framework (SFF), which encompasses the policy, risk management processes and
position statements for sectors with high sustainability risks. Group Sustainability conducts
control testing on these policies and procedures every six months. Additionally, periodic
audits are carried out by the Group Corporate Assurance Division to maintain accountability
and effectiveness.

| Sustainable Finance Framework

###### HIGH SUSTAINABILITY RISK SECTORS

We have identified 148 sub-sectors within 10 main industries that are classified as high
sustainability risk (HSR) sectors. We have also developed seven Sector Guides that cover the
palm oil, forestry (including rubber), oil and gas, construction and infrastructure, coal, mining
and quarrying and manufacturing sectors. The guides detail our requirements and
considerations when financing these sectors, and serve to guide and motivate our clients
within these sectors as they mark their progress in their respective sustainability journeys.
A summary of the requirements can be found in our Sustainable Finance Framework.

We aim to periodically update and enhance our HSR sector requirements in stages to
ensure we are in line with evolving expectations and best practices. The exercise involves a
review and refresh of all segments, including sectors that were previously not in scope.
Sectors with high environmental and social impacts, material exposure and where we have
Net Zero commitments and/or Alliance commitments will be added gradually."
"Sustainability has been institutionalised into our business through CIMB's sustainability governance framework. The framework has been designed with a clear delineation of roles and responsibilities that ensure accountability, transparency and effective execution of our sustainability decisions. We continuously review and enhance our sustainability governance and operating model to ensure it remains robust, resilient and up-to-date with new developments. The Group Sustainability and Governance Committee (GSGC) oversees and steers our sustainability risks and opportunities, providing the Board with effective decision-making capabilities. The committee advocates for sustainability and strengthened governance across the Group, fostering a work environment that prioritises positive impacts, ethics, and integrity. The Board is the highest governing body accountable for CIMB's sustainability strategy. Sustainability-related roles and responsibilities of the Board are incorporated in the Board Charter. The Group Sustainability and Governance committee assists the board in fulfilling its responsibilities in advocating and fostering a culture of sustainability, ethical conduct, and integrity in our corporate DNA. The Group Sustainability Council (GSC) assists the Group Chief Sustainability Officer in leading the development and successful execution of CIMB's sustainability. The GSC reports to the Group Transformation Committee, which assists the Group CEO in directing and steering CIMB's overall strategy. [...] The Sustainability Risk Management Framework defines how we govern sustainability risks in our business. Sustainability risks, including climate-related physical and transition risks and human rights risks, are integrated into both the Group's Risk Library and the Enterprise-Wide Risk Management Framework. The analysis, reports and targets for the Principles of Responsible Banking impact analysis including on the two impact areas are reported and approved by our management and board committees (i.e. GSC, GTC, GSGC, as above) in accordance with our Sustainability Governance Operating Model. Our commitment to sustainability is demonstrated by the linkage of our CEO, top management, and employees of all divisions to sustainability related key performance indicators (KPIs) which impact their remuneration.