KUALA LUMPUR: Malaysian banks have stepped up their climate financing efforts in recent years, AmBank Group chief sustainability officer Amanah Aboobucker said, adding that the industry is now better equipped to classify, assess and support sustainable projects.
“A turning point was in April 2021, when Bank Negara Malaysia introduced the Climate Change and Principle-based Taxonomy (CCPT). That became the foundation for how we assess the facilities we offer to participants in the real economy,” she said in a panel session at Climate Finance Summit 2025 today.
Amanah said the CCPT introduced a framework for banks to assess and classify economic activities based on their alignment with climate objectives.
Under the CCPT, the industry is required to categorise financing into three buckets: climate-supporting, transitioning and watchlist.
“Today the banking industry has a much better grasp of what qualifies as climate-supporting, what falls under transition, and what goes on the watchlist. “From a product innovation perspective, this classification helps us strategically assess financing needs and opportunities,“ she said.
When the guideline was first introduced, Amanah said, banks found it difficult to implement the taxonomy and meet its data requirements. “Many real economy players also struggled to provide the necessary disclosures. But through multiple iterations and engagements, we’ve collectively improved.”
The industry’s goal is to grow the share of financing that falls under climate-supporting and transitioning categories, Amanah said.
That said, she added, banks are not avoiding clients who fall under the watchlist. In fact, it sees the greatest opportunity in supporting those clients.
“We engage with them, understanding their business models, and helping them progress from the watchlist to transition, and ultimately to climate-supporting. This is where our relationship managers play a key role.”
Amanah said that while some may view this purely as risk management, banks also serve as barometers of the economy and need to strike the right balance in their approach every day. Furthermore, the industry is contributing to the Climate Finance Innovation Hub as part of Joint Committee on Climate Change.
“We’ve just begun exploring potential pilot projects and working on developing innovative financing solutions.”
According to AmBank’s FY2025 sustainability disclosures, it estimates that 39% of its non-retail loan portfolio, valued at RM51.9 billion, is tied to hard-to-abate sectors. These include palm oil, coal mining, power generation, oil and gas, cement, iron and steel, and commercial real estate. Collectively, they account for 45% of the bank’s total financed emissions.