Sustainability Report
This report presents our sustainability progress and performance. It provides disclosures on how we create positive environmental and social impact for the betterment of the broader society.
Task Force on Climate-Related Financial Disclosures (TCFD)
We are an official supporter of the Task Force on Climate related Financial Disclosures (TCFD) from July 2022. Our latest report was prepared in reference to the TCFD Application Guide for Malaysian Financial Institutions.
Governance
| Disclosures | Description of Disclosures | References |
| G1 : Board oversight of Sustainability and Climate-Related Matters | The Board of Directors holds the highest authority over sustainability issues, embedding ESG principles across the Group. This oversight includes an approach to managing climate-related risks and opportunities. The Board integrates sustainability into long-term strategic planning, considering risks and opportunities. Regular reviews ensure that sustainability is a core part of the Group's strategy. The assessment of material sustainability and climate-related risks was conducted from a group-wide perspective, ensuring a cohesive and comprehensive approach. | Sustainability Governance: Sustainability (including Climate) Governance, Functions & Decision-Making, pages 28 to 30 Sustainability Governance: Governance & Oversight, pages 30 to 31 Creating Value - Responsible Banking: Responsible Financing & Building Climate Resilience, pages 35 to 47 |
| G2: Sustainabilty Governance Structure Including Climate-Related Matters at the Management Level | The Board of Directors holds the highest authority. We integrate ESG principles, including climate-related risks and opportunities, into the Group's strategy and decision-making processes. The GSCRC, chaired by the Group CEO, evaluates sustainability issues at least quarterly before these are presented to the RMC and Board. In FY2024, the Group Sustainability Council was enhanced to the GSCRC, and the Chief Sustainability Officer (CSO), appointed on 1 June 2023 reports directly to the Group CEO. Sustainability is one of the three principal mandates for the Group, acknowledgement of its importance for business strategy. Sustainability initiatives are managed and measured through regular updates by the CSO. supported by Group Risk's Enterprise and Climate Risk Unit. Progress is communicated to stakeholders via intranet updates and a sustainability microsite, ensuring transparency and engagement. | Sustainability Governance: Sustainability (including Climate) Governance, Functions & Decision-Making, pages 28 to. 30 Sustainability Governance: Governance & Oversight, pages 30 to 31 |
| G3: Sustainability and Climate-related Board Credentials | Regular briefings on key sustainability matters were provided to the Board, leveraging the diverse skill sets and expertise of Board members. The CSO, in collaboration with the Climate Risk team, prepare detailed reports for these sessions, ensuring that the Board's decisions on sustainability objectives are well-informed and aligned with AmBank Group's strategic goals. Independent Non-Executive Director Ms Felicity Ann Youl provides sustainability oversight at the Board level, given her subject matter expertise. Since FY2023, comprehensive training programmes have been implemented to enhance the Board and Senior Management's understanding of sustainability, including climate-related matters. These initiatives are part of our commitment to strengthening leadership competencies in critical sustainability areas, providing a comprehensive range of skills, knowledge, and experience to our Board members. | Sustainability Governance: Governance & Oversight, pages 30 to 31 Integrated Annual Report: Corporate Governance Overview Statement, page 141 Creating Value - Conscious Self-Conduct: Developing Our People, page 88 |
| G4: Sustainability and Climate-related Training | We continuously enhance our leaders' competencies and alignment with sustainability objectives to ensure they are equipped to drive our ESG agenda. Regular briefings on key sustainability: matters were provided to the Board, prepared by the CSO and Climate Risk team, thus, ensuring well-informed decisions aligned with AmBank Group's strategic goals. Since FY2023, we have implemented comprehensive training programmes for the Board and Senior Management, part of our commitment to strengthening leadership competencies in . This includes Board Sustainability Awareness Programme, Board Mandatory, Accreditation Programme (MAP) Part 11: Leading the Impact (LIP), BNM Climate Risk Management and Scenario Analysis and Climate Risk Outlook. | Sustainability Governance: Governance & Oversight, pages 30 to 31 Intergrated Annual Report Corporate Governance Overview Statement, page 141 Creating Value - Responsible Banking: Responsible Financing & Building Climate Resilience, page 45 Creating Value - Conscious Self-Conduct: Developing Our People, page 88 |
| G5: Sustainability and Climate-related Discussions in Board Meetings | The Board of Directors meets eight times annually, with the RMC's addressing sustainability-linked topics, including climate-related matters at four sittings in FY2024. Key topics discussed in these meetings include approval of climate-related policies and strategies, updates on climate risk management and scenario analysis, direction and plans for AmBank Group's Net Zero Strategy, and opportunities in sustainability and industry collaboration. Communication and stakeholder engagement are emphasised, with top management, including the Board and Group CEO, stressing the importance of sustainability. Updates and decisions are communicated through various channels to ensure transparency and engagement with both internal and external stakeholders, including regular intranet e-blasts and updates on the sustainability microsite. The Board of Directors oversee the integration of the sustainability agenda into group-wide strategies, risk assessments, and decision-making processes. They evaluate AmBank Group's capacity to address sustainability challenges and assess sustainability and climate risk matters from audits, assurance reports, and regulatory disclosures to ensure the effectiveness of governance, internal controls, and risk management systems. | Sustainability Governance: Governance & Oversight, pages 30 to 31 |
| G6: Sustainability/ Climate-linked Remuneration | Since FY2021, sustainability and climate-related KPIs have been embedded into the annual performance metrics for the Group CEO and direct reports. The Group Nomination and Remuneration Committee (GNRC) reviews these KPIs annually to inform remuneration recommendations for Directors, and senior management, ensuring accountability for achieving sustainability objectives. The GSCRC tracks all sustainability-related KPis at least quarterly, with selected KPis cascaded to lower management levels. We have set measurable targets aligned with ten UN SDGs, focusing on areas such as GHG emission reductions and Green Financing. | Sustainability Governance: Governance & Oversight, pages 30 to 31 |
Strategy
| Disclosures | Description of Disclosures | References |
| S1: Identification of Climate-related Risks and Opportunities | We have integrated ESG and climate-related risk identification into our non-retail portfolio risk assessments, guided by the Bank's Climate Change and ESG Risk Assessment (CERA) guidelines, enhanced in 2024 to meet Bank Negara Malaysia regulatory requirements. Initial internal analysis has determined the Group's financed emissions for the non-retail portfolio. The hard-to-abate sectors contribute to over half of these financed emissions. A more detailed validation exercise is being undertaken in FY2025. AmBank Group started the identification of physical and transition risks with reference to BNM's Climate Risk Management and Scenario Analysis (CRMSA) in FY2024, which applies to operations and portfolio management. Physical risk assessment includes operations, the retail portfolio, and collateral assets, while transition risk focuses on non-retail financing and investment portfolios. In support of a just and fair transition, facilities extended to high-emission sectors are controlled and managed by setting of sector limits and observation of additional risk mitigation actions. This aims at management of transition risk, guided by the Non-Retail Credit Policy and Group Risk Appetite Framework. We have embedded the policy and procedure in place for monitoring, analysing, and responding to climate-related risks of the Bank's operations in our Business Continuity Management (BCM) policy, guideline, and practice guide. The trigger points are based on the physical risk score generated by a licensed analytical tool. A refinement of strategy and risk appetite is expected in FY2025 with further analysis and assessment of physical and transition risks to include the retail portfolio and hard-to-abate sectors as we develop our transition plan. | Creating Value - Responsible Banking: Responsible Financing & Building Climate Resilience, pages 35 to 47 |
| S2: Impact of Climate-related Risks and Opportunities | In FY2024, we established an Enterprise Risk and Climate Risk Unit under Group Risk to manage portfolio climate risks and identify relevant opportunities for business lines. This team, along with others in Portfolio Risk Management, are adequately trained and responsible for monitoring of portfolio emissions and impact indicators such as Probability of Default (PD), Loss Given Default (LGD), and Expected Credit Loss (ECL) using a licensed climate assessment tool. They report to the CSO and Head of Portfolio Risk Management. Relevant Group Operational Risk employees have received training and are responsible for the management of operational climate-related risks for branches, main buildings, data centres, and Third-Party Service Providers using a licensed climate assessment tool. Impact will be reported to the GSCRC, Group Management Risk Committee (GMRC), the RMC and Board going forward on a quarterly basis in FY2025. | Sustainability Governance: Governance & Oversight, pages 30 to 31 Creating Value - Responsible Banking: Responsible Financing & Building Climate Resilience, pages 35 to 47 |
| S3: Strategy and Risk Appetite on ClimateChange-Related Risks and Sustainability Measures | Our Group's policy and direction on climate change and sustainability are guided by its Sustainability Framework and Risk Appetite Statement (RAS). Key goals include managing exposures to GHG emission-intensive sectors while assisting customers in transitioning to sustainability pathways, aiming for net zero as early as FY2050. The target is to ensure at least 70% of the non-retail loan/financing portfolio (with limits of at least RM10 million) comprises exposures with low Environmental, Social, and Governance (ESG) Risk rating by FY2030. We however anticipate to further refine this metric as we study decarbonisation pathways in FY 2025. In addition to the Sustainability Framework, other key policies and frameworks related to climate-related risks and opportunities are disclosed in the Sustainability Report. AmBank Group conducted a materiality assessment to understand stakeholder priorities and have identified 12 sustainability material matters under three environmental themes. The outcomes from the CRMSA, which cover material sustainability and climate-related risks and opportunities, will form the foundation for AmBank Group's upcoming Net Zero Roadmap, to be developed in FY2025. | Creating Value - Responsible Banking: Responsible Financing & Building Climate Resilience, pages 35 to 44 |
| S4: Scenario Analysis as an Opportunity to Improve Strategic Resilience and Explore Climate Vulnerabilities | AmBank Group is undertaking scenario analysis guided by BNM's Policy Document on CRMSA. This includes using Network for Greening the Financial System (NGFS) baseline scenarios. We are currently analysing both non-retail and retail portfolios based on these scenarios, following guidelines set by BNM. Our Senior Management and the Board have been briefed on initial assessment outcomes. | Creating Value - Responsible Banking: Responsible Financing & Building Climate Resilience, pages 43 to 44 |
Risk Management
| Disclosures | Description of Disclosures | References |
| R1 and R4: Process for Identifying and Assessing Climate-related Risks | We have integrated ESG due diligence into our financing evaluation processes, our CERA questionnaire were enhanced with reference to BNM's Due Diligence Questions (DDQ) for GP3 and GP4 in relation to the Climate Change and Principle Based Taxonomy (CCT). AmBank Group's Enterprise Risk Management (ERM) Framework was established in January 2024 with the objective of enhancing the understanding and the awareness of the Group's most significant risks including climate-related risks. The Board-approved qualitative ESG RAS has been established to manage exposures to sectors with high ESG risks. Additionally, we began by identifying vulnerabilities using a physical risk tool, covering corporate offices, data centres, branches, and ATM locations. To enhance AmBank Group's resilience against climate change impact, we have integrated climate-related operational risks into our BCM framework. AmBank Group will adopt scenario analysis under BNM's Climate Risk Management and Scenario Analysis Policy, assessing potential credit losses over a 30-year period across three distinct climate scenarios prescribed by the NGFS - Current Policy, Early Policy, and Late Policy. To strengthen our internal capabilities, we enlisted the expertise of external consultants to guide our adoption of CRMSA. This collaboration provided us with tools for assessing climate-related risks and helped establish streamlined processes for data gathering, essential for quantifying potential impact on our portfolio and operations. We adopted a multi-faceted approach for climate-related risk assessment, covering vulnerability and financial impact assessments. The vulnerability assessment employs various climate tools to identify potential vulnerabilities to physical and transition risks within financing and investment portfolios. Financial impact assessments quantifying key metrics such as climate risk-adjusted Probability of Default (PD), Loss Given Default (LGD) and Expected Credit Loss (ECL), indicating potential impact of physical, transition, and combined effects. Climate risk significantly impacts AmBank Group's existing risk categories: Credit Risk: Affects repayment capacity and collateral values due to physical and transition risks. Market Risk: Increased volatility and declining security values from policy changes and investor sentiment. Liquidity Risk: Higher provisioning requirements due to increased financing defaults and credit risk. Operational Risk: Disruptions to operations and infrastructure. Reputational and Strategic Risks: Negative publicity and loss of market share from inadequate climate disclosures and transition challenges. We identified key sectors such as Electricity, Manufacturing, Oil and Gas, Basic Metals, Iron and Steel, and Cement as high transition risk and are in the midst of developing tailored strategies to align with Malaysia's Net Zero target as early as 2050. Our risk management includes integrating climate risk into the RAS, ensuring operational resilience through the BCM framework, and conducting scenario analyses to anticipate and manage risks across different policy scenarios. | Creating Value - Responsible Banking: Responsible Financing & Building Climate Resilience, pages 35 to 47 |
| R2 and R5: Process for Managing Climate related Risks | We perform a comprehensive vulnerability assessment through our climate risk assessment process, using specialised licensed climate risk tools to identify physical and transition risk vulnerabilities across our financing and investment portfolios. This includes a financial impact assessment to quantify climate risk-adjusted metrics such as Probability of Default (PD). Loss Given Default (LGD) and Expected Credit Loss (ECL), leveraging the latest NGFS climate scenarios. Scenario analysis using climate models and financial data to assess risks allows for prioritising risks based on indicators, exposure size, and potential impact. We adopt a multifaceted approach encompassing both adaptation (resilient infrastructure, backup sites) and mitigation measures. To enhance AmBank Group's resilience against climate change impact, we have integrated climate-related operational risks into our BCM framework. We began by identifying vulnerabilities using a specialised physical risk tool within our internal operations, covering corporate offices, data centres, branches, and ATM locations. Throughout the assessment process, we remained vigilant for red flags indicating heightened vulnerability or exposure to physical risks. When such red flags are identified, we proactively explore alternate sites or relocation options. ESG due diligence is part of the financing evaluation process to assess climate risks for non-individual customers and understand portfolio climate resilience, aligned to BNM's CCT. evaluation of economic activities based on five guiding principles and resulting in an overall ESG score. Transactions identified with a High ESG Risk Grade will undergo mandatory escalation to the Credit and Commitments Committee (CACC) for further review and decision-making. This highlights a structured approach to managing high-risk transactions and ensuring appropriate oversight at a higher level within our organisation comprising of both Business and Risk participation. We are also investing in equipping its decision-makers with the knowledge and skills needed to navigate complexities of sustainability effectively through training programmes focusing on sustainable financing, ESG considerations, and climate change risks in the economy. | Creating Value - Responsible Banking: Responsible Financing & Building Climate Resilience, pages 35 to 47 |
| R3 and R6: Process for integrating [i Identifying and Assessing Climate-related Risks and (il) Managing Climate related Risks; into Overall Risk Management | We employ an integrated, risk-based approach to managing climate risks, focusing on the interrelationships between various risk types. We have established a Board-approved qualitative ESG RAS, as a foundational step in integrating climate-related risks into the Risk Appetite Framework. This statement outlines the approach to managing business operations and credit exposures with significant environmental risks, particularly focusing on sectors with high ESG risks and high GHG emissions. The RAS guides us in setting strategic priorities and aligning business decisions with environmental sustainability goals. We have begun measuring the financed emissions of the non-retail borrowers' scope 1 and 2 emissions using a licensed specialised tool. As the methodologies and data used to analyse the cimate risks continue to mature over time, we would be in a better position to disclose the capabilities built that will help identify relevant climate-related risk drivers which may materially impact our key portfolios. These include key risk indicators and metrics used to quantify exposures and their impact to these risks. We will continue beefing up our capacity in tandem with the expanding knowledge base on nature and climate, to improve the insights into our exposure to climate risks. In our next phase, we intend to establish appropriate risk appetite metrics for sustainability and climate-related risks as we work on the Group's transition plan. | Creating Value - Responsible Banking: Responsible Financing & Building Climate Resilience, pages 35 to 47 |
Metrics and Targets
| Disclosures | Description of Disclosures | References |
| M1: Key Climate-related Metrics | In FY2024, we reduced our Scope 1 GHG emissions to 65 CO,e, down from 70 tO, in FY2023. We reported 17,368 ICO,e of Scope 2 emissions which is 20% reduction against 2019 baseline. Scope 3 emissions rose to 1,231 ICO, from 876 1C0,e in FY2023, driven by increased employee business travel. The financed and investment portfolio's exposure to transition risks focuses on sectors such as electricity, gas and water supply, manufacturing, oil and gas, basic metals, iron and steel, and cement. Physical risks are assessed in corporate offices, data centres, branches, and ATM and CDM locations, considering flood zones. We are committed to supporting low-carbon assets and transitional activities. Climate risk engagement involves working with external consultants and proprietary tools for comprehensive risk assessment and strategy development. We actively manage climate-related risks, with sectoral analyses and transition strategies as key components of our approach. We will integrate these efforts into our Net Zero Roadmap and BCM framework, emphasising resilience against climate impact and a systematic transition for high-risk sectors. Additionally, AmBank Group's efforts are guided by robust policies, frameworks, and certifications such as the Group Energy Policy, Energy Management Practice Guide, ISO 14001:2015, and the Energy Management Gold Standard (EMGS) These measures ensure systematic improvements and energy efficiency across operations. | Creating Value - Responsible Banking: Responsible Financing & Building Climate Resilience, pages 35 to 47 Creating Value - Conscious Self-Conduct: Responsible Consumption, pages 95 to 105 |
| M2: Key Climate-related Targets | For FY2024, we have embedded KPis in senior management targets to drive down GHG emissions. These include & reduction in Scope 1 and 2 GHG emissions and up to a 20% reduction in paper consumption, with an increased use of sustainably sourced paper. We had set a risk direction to ensure that at least 70% of the non-retail loan/financing portfolio (for limits of at least RM10 million) will consist of exposures with low ESG Risk Ratings by FY2030. We however anticipate to further refine this metric as we study decarbonisation pathways in FY2025 as part of our transition plan. | Sustainability Governance: Governance & Oversight, pages 30 to 31 Creating Value - Conscious Self-Conduct: Responsible Consumption, page 105 Sustainability Performance Data, page 143 |