ASEAN - CIMB Islamic

About CIMB Sustainability Report 2018SCOPE OF REPORTINGThe CIMB Sustainability Report 2018 is our sustainability narrative for CIMB Group of Companies across ASEAN. This year, we have expanded the scope ofreporting to include various strategies, initiatives and programmes that were implemented in Malaysia and selected developments in Indonesia, Singaporeand Thailand (MIST).CIMB continues to use the Global Reporting Initiative (GRI) framework for reporting and in 2018, the report has been prepared “In Accordance” with GRIStandards: Core Option. For easy reference to GRI Standards that we have documented in this report, we have included a GRI Content Index on pages 131to 138 of this report.The scope for CIMB Sustainability Report 2018 and the GRI Index includes information for the period 1 January 2018 to 31 December 2018, mainly forCIMB Bank Berhad unless specified otherwise. All quantitative and qualitative data for indicators is disclosed where possible, with 2017 or 2018 as thebaseline year for comparability of data, highlighting trends and showing progress. The last report was published in March 2018 for the period 1 January2017 to 31 December 2017.In documenting this report, we have applied the following principles:SUSTAINABILITY CONTEXTWe have achieved some level of alignment between our sustainability aspirations and the global UN Sustainable Development Goals (SDGs) as well asthe key national priorities. For instance, in Malaysia, we aligned our sustainability strategies with the inclusive development agenda set-out in the NationalDevelopment Plans. These are further narrowed down for relevance and importance based on our business strategies, organisational focus and growthagenda.OUR TRIPLE-FILTER ALIGNMENT APPROACHUN SustainableDevelopment GoalsNationalPrioritiesStrategic BusinessFocusOur Long-Term ObjectiveWhile our primary measure of business success is to delivershareholder value, our equal responsibility is towards our othermultiple stakeholders. We are committed to creating a better futurefor them, by ensuring a net positive economic, environmental andsocial impact.8A S E A NC A T A L Y S T

About CIMB Sustainability Report 2018STAKEHOLDER INCLUSIVENESSWe have institutionalised a mechanism to proactively engage, consult, and partner with our priority stakeholders in planning and implementing our 5-YearSustainability Roadmap.We have committed to use our existing relationships to influence our ASEAN-wide network of stakeholders to adopt and integrate sustainable businesspractices. Our basis for selecting the most critical stakeholders is to consider three factors: stakeholders’ influence on our business, interactions,reputation; the degree or level of our dependency on various stakeholders to further their interests as well as our business; stakeholders who sharecommon business and community interests and aspirations or their representativeness.STAKEHOLDER ENGAGEMENTWe engaged various stakeholder groups to understand specific Sustainability issues relevant to themCustomersCommunityInvestorsEmployees 200ENGAGEDRegulators1Suppliers2Source stakeholder data frommultiple internal sources andstakeholder touchpoints, includingbank branches, surveys, townhalls,review meetings, briefing sessions etc.C I M BG R O U P3Seek stakeholder feedbackthrough proactive biennialengagement via focus groups,in-depth interviews, and surveys.H O L D I N G SB E R H A D/S U S T A I N A B I L I T YReview our current portfolio andsectoral focus to better understandour ability to create direct andindirect impact, both by way ofreducing negative impact andcreating positive impact.R E P O R T2 0 1 89

About CIMB Sustainability Report 2018In the table below, we have listed our most critical stakeholders, the various platforms we use to bridge and strengthen our relationships, and some of thekey topics that interest our stakeholders.EconomicEnvironmentalSocialTopics of Interest CustomersBasis for Selection Dependency InfluenceBanking distributionchannels (Ongoing)Call centres (Ongoing)Feedback forms andsurveys (Annual)Social media (Ongoing)Seminars &Conferences (Quarterly)Complaints and feedbackmechanism at branches(Ongoing) Consistent & Superior CustomerExperienceEnhanced Digital ServicesFinancial EducationFinancial InclusionGreen Education and Participation Access to financeFavourable lending termsCustomer experience Leadership by Example - CorporateValues and CultureFair Remuneration and BenefitsGrievance MechanismsFinancial LiteracyTalent Development and TalentMobilitySustainabilityFrequency of Engagement – DailyBanking distributionchannels (Ongoing)Call centres (Ongoing)ClientsCorporate/CommercialBasis for Selection Dependency ImpactSeminars &Conferences (Quarterly)Meetings (Ongoing)Frequency of Engagement – DailyTownhallsBeyond 2018ConversationsTuesday ChatsEmployees Basis for Selection Dependency InfluenceDepartment meetingsFeedback surveysCommunity eventsIntranet/Newsletter/Internal CommunicationsComplaints and feedbackmechanism in officesFocus GroupsFrequency of Engagement – Daily Procurement processCommunity eventsPerformance evaluationFocus GroupsSuppliersBasis for Selection DependencyFrequency of Engagement – Monthly10A S E A NC A T A L Y S T Partnerships for GrowthFair Remuneration and PaymentTermsGrievance MechanismsFinancial LiteracyCommunity Development

About CIMB Sustainability Report 2018Topics of Interest MeetingsSeminarsGovernment andRegulatorsBasis for Selection Dependency InfluenceOther forms of communicationInterviews Sustainable Supply ChainSustainability Education andAwarenessSustainable FinanceFinancial InclusionQuality EES Reporting/CommunicationValue-based IntermediationCustomer ExperienceTreating Customers FairlyTalent DevelopmentClimate Change Partnerships for GrowthFinancial InclusionVolunteerismFinancial LiteracyCommunity DevelopmentClimate Change Sustainable FinanceSustainable Supply Chain PracticesQuality ESG Reporting/Communication Frequency of Engagement – QuarterlyCommunity/NGOs/Civil SocietyBasis for Selection Dependency InfluenceCommunity partnershipsand investments,including donationsSocial MediaFocus GroupsFrequency of Engagement – DailyInvestorsBriefingsMeetingsBasis for Selection InfluenceFrequency of Engagement – Quarterly, AnnualC I M BG R O U PH O L D I N G SB E R H A D/S U S T A I N A B I L I T YR E P O R T2 0 1 811

About CIMB Sustainability Report 2018MATERIALITY & PRIORITISATION Materiality: In 2018, we planned an in-depth stakeholder engagement and materiality assessment exercise through focus groups, one-on-oneinterviews and online survey. Based on our analysis of the output (in terms of quantitative and qualitative data), as well as re-ranking of the materialtopics determined in 2016 and 2017 by the stakeholders, we identified 40 material topics. We narrowed them by grouping material topics based on theirexpected impact, either through our operations, clients or other business relations. Prioritisation: To address the material topics strategically, we have set priorities over a 3-5-year term, based on our current performance on leadingmarket indices, material relevance to stakeholders, as well as our influence on stakeholders’ assessments and decisions.12The Top 40 material topics were assigned scoresbased on a simple 3 Point Narrative Rating Scaleto determine the degree of their importance(3 High, 2 Medium, 1 Low) to various stakeholders.Based on the averages, 20 material topics werenarrowed down as having significant EES impacts.34These top 14 material topics will remain our keyareas of focus over the next 3-5 years. For eachof the 14 material topics, we have also definedthe Management Approach by clearly articulatingthe strategic link to our business; the risks andopportunities; our long-term strategy; and progressduring the year under review.A final alignment and grouping exercise furthernarrowed down the focus to 6 Highly Material Issuesand 8 Important Topics.List of 6 Highly Material Issues:HighHighly MaterialIssuesCustomerexperience123456Customer experienceSustainable financeTechnologyGovernanceNurturing growthTalent attraction, growth & retentionIMPORTANCE TO STAKEHOLDERSList of 8 Important blefinanceNurturing growthTalent attraction, growth & retentionCorporate cultureFinancial literacy,inclusion and well-beingSustainable Supply ChainHealth, safety &well-beingSustainability education & participationDiversity & inclusionCorporate citizenship & volunteerismClimate change(direct footprint)LowLow12SIGNIFICANCE OF CIMB’S EES IMPACTSA S E A NC A T A L Y S THigh12345678Sustainable Supply ChainSustainability education & participationCorporate cultureFinancial literacy, inclusion and well-beingHealth, safety & well-beingDiversity & inclusionCorporate citizenship & volunteerismClimate change (direct footprint)

About CIMB Sustainability Report 2018TARGET-SETTINGIn consultation with the Board and Group Management Committee, we have decided to embark on a five-year roadmap to implement our first round ofsustainability embedment. We believe it is extremely important to take a multi-pronged approach to target-setting, to ensure it is scientific, measurable, andmeaningful for both the organisation and its critical stakeholders, including investors.We are currently in the process of evaluating various methodologies for target-setting, to include a systemic approach, where direct results or impactcan be achieved from improvements in related areas of sustainability. While we are aiming to set specific KPIs and targets over the next two years,our aspiration is to progressively demonstrate sustainability leadership across our ASEAN footprint.INCREMENTALTRANSFORMATIONALWORLD LEADINGDrive Change andInstitutionalise and EmbedSustainability PrinciplesChampion SustainabilityInitiatives and Targets forPositive ImpactDemonstrate SustainabilityLeadership Across ourASEAN Global FootprintCompleteness: We underwent many deliberations to improve the level of transparency and accountability across various functions of the Group, which inturn will enable us to improve the quality of our reporting, in terms of balance, integrity, and meaningful progress.INDEPENDENT ASSURANCE(GRI: 102-56)This report has been studied by UN Global Compact Network Malaysia to review our approach to mapping sustainability commitments to UN SustainableDevelopment Goals. We are targeting to undertake independent assurance for our sustainability report in 2019.POINT OF CONTACT(GRI: 102-53)Our Sustainability agenda rests on our corporate conscience, which allows us to reflecton the impact of our decisions and our business activities on the society and our multiplestakeholders. This in itself instills a sense of responsibility in all of us at CIMB, drivingour actions and behaviour. Our stakeholders therefore are assured of their best interestsin dealing and partnering with CIMB, as we continuously deliberate on their issues toimprove our solutions.HQ ADDRESS:CIMB Bank BerhadMenara CIMB,Jalan Stesen Sentral 2,Kuala Lumpur Sentral,Kuala LumpurHowever, we continuously seek to improve the quality of our reporting and hence, wewelcome all feedback, ideas, and questions on CIMB Sustainability Report 2018. Pleasecontact us at:Contact Person Details:Luanne SiehHead, Group Sustainabilitysustainability@cimb.comC I M BG R O U PH O L D I N G SB E R H A D/S U S T A I N A B I L I T YR E P O R T2 0 1 813

Statementfrom Group CEO(GRI: 102-14)“CIMB has always emphasised value creation whichrequires a delicate balancing of the long-term interestsof our people, planet and profitability. To that end,we are pleased to commit to the UNEP FI objectivesto champion responsible banking and help transformglobal banking practices. We firmly believe that as anindustry that plays an instrumental role in economicgrowth and global trade, banks can be a powerful forcefor change to create a huge positive impact not justeconomically, but also socially and environmentally.”‘18IN REVIEW14A S E A NOverall, the banking sector continued to be resilient, underpinned bystable net interest margins with better managed capital and credit-cost.In 2018, while we maintained our healthy growth numbers, we saw a shiftin our shareholders’ predisposition towards profitability. Their idea ofdetermining the real cost of capital and tangible benefits of sustainabilitywere also top of our Board’s agenda this year. There were deliberationson what ‘banking of the future’ would look like, with financial solutionsand investment decisions designed based on true cost and benefits toC A T A L Y S T

Tengku Dato’ Sri Zafrul Tengku Abdul AzizGroup Chief Executive Officerbusiness and stakeholders. We believe that regional banking groups such asCIMB have a greater responsibility to lead the industry towards developing amore robust system to evaluate the ramifications of unsustainable activitiesthat (over a period) will threaten financial stability of banks and markets. Ifbanks could start purposeful discussions in this area, we are confident thatover the next decade, there will be a new paradigm for banking, enabled bynot just fiscal and regulatory factors, but also sustainability considerations.C I M BG R O U PH O L D I N G SB E R H A DWhile this remains our long-term aspiration, during the year under review,we focused our efforts to identify voluntary mechanisms such as the UnitedNations Environment Programme Finance Initiative (UNEP FI), and BankNegara Malaysia’s Value-based Intermediation (VBI) in addition to variousmarket indices such as the Dow Jones Sustainability Index. We were alsoaccepted on Thompson Reuters D&I Index Ranking and became the ONLYASEAN Bank listed on 2018 Top 100 Most Diverse & Inclusive organisationsglobally. These will go a long way into embedding sustainability principlesinto our business model./S U S T A I N A B I L I T YR E P O R T2 0 1 815

Statement from Group CEO123United Nations EnvironmentProgramme (UNEP FI)Thompson Reuters D&I IndexRankingValue-based IntermediationThe ONLY ASEAN Banking Groupto be a Founding Member ofthe UNEP FI’s Principles forResponsible BankingThe ONLY ASEAN Bank listedon 2018 Top 100 Most Diverse &Inclusive Organisations GloballyCIMB is one of the 28 globalbanks and the only ASEAN bankto contribute to the developmentof the PrinciplesPerformance ranked on 24 metricsacross four categories: Diversity,Inclusion, People Development andNew Controversy pillarsWe are the first and only ASEAN banking group to support the UNEPFI in framing the Principles for Responsible Banking, in addition to ourcontributions to promote VBI principles as a global leader in IslamicFinance. These reinforce our commitment to embrace sustainability withinthe Group. What we would like to catalyse over the next 5 years is increasedawareness of sustainability principles and sustainable development amongstCIMB’s network of stakeholders and the industry as a whole. Our targetwill be to create value for each of these stakeholders in the form of positiveenvironmental, economic and social impacts.During the year under review, we rolled-out the CIMB Group SustainabilityRoadmap 2023, which outlines our broad strategies to address the topmaterial issues that are important to our stakeholders. This roadmap hasbeen developed as an integral part of our Forward23 Business Strategy.The Board has also endorsed our sustainability governance framework,Group Sustainability Policy, Group Sustainable Financing Policy andSustainable Procurement Guidelines amongst others. These tools willnot only empower #teamCIMB to confidently embark on our 5-yearsustainability journey, but will also help us meet our purpose withtransparency and accountability through measurable outcomes.On this path of responsible banking, we strongly believe that our peoplewill be instrumental in bringing about a change in mindset and behaviour,internally and externally. This will be extremely critical for us to raiseawareness to our ASEAN-wide stakeholders, who could also be inspired tojoin our journey in furthering sustainable development.A S E A NTowards integrating the VBIprinciples of enterpreneurial mindset,community empowerment, good selfgovernance and best conduct intoour business strategies84%of our employees believe that CIMBGroup’s sustainability mission willcreate significant economic, environmental,and social impact.Our internal efforts, led by our people, will also be translated into ‘external’value for our customers and business partners. During the year, weintroduced preferential rates for new hybrid car customers and specialmortgage pricing for certified Green Buildings (residential projects). Wefinanced the International School Kuala Lumpur’s ‘green’ facility, which isthe first Malaysian school designed to achieve platinum Green BuildingIndex (GBI) status based on environmentally sustainable concepts. Wehave also issued Republic of Indonesia’s (ROI) Trust Certificates (“WakalaSukuk”) from its recently upsized programme of USD25.0 billion. The Sukukissuance, comprising a 5-year Green tranche and a 10-year tranche, is theninth USD Sukuk issuance by the ROI. The 5-year tranche also representsthe world's first sovereign Green Sukuk issuance. These initiatives senda strong signal that we will increasingly support and introduce innovativefinancing schemes to encourage practices and projects that fostersustainable development.In 2018, we identified close to 100 champions across the Group, whichincludes representation from Malaysia, Indonesia, Singapore and Thailandwho will not only trigger meaningful discussions on sustainability issuesconcerning the workplace and marketplace, but also initiate projects forlong-term solutions.16CIMB Islamic is a Founding Memberof the Community of Practitioners ofBank Negara Malaysia’s Value-basedIntermediation (VBI)C A T A L Y S T

Statement from Group CEOCustomerCentricityTechnology& DataOurPeopleVentures& PartnershipsSustainabilityTake a ‘customer-first’approach for efficiencyand unparalleledexperienceEnable a new way ofworking by modernisingour tech infrastructureand shifting towardsautomation andinnovationBecome nimble, grow3D talent mix a

CIMB BANK CIMB NIAGA CIMB INVESTMENT BANK CIMB THAI BANK CIMB ISLAMIC CIMB BANK PLC CIMB VIETNAM CIMB Bank* is the Group’s commercial bank in Malaysia with 259 branches across the country. It has subsidiaries in Thailand, Cambodia and Vietnam, as well as branches in Singapore, Philippines