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KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2023 OUR REPORTS The Annual Report 2023, Corporate Governance Report 2023 and Sustainability Report 2023 are our primary reports. Annual Report Provides an overview of Kenanga Group’s financial performance, as well as business highlights of the year. Corporate Governance Report Provides an overview of Kenanga Group’s corporate governance and how it facilitates effective management to deliver long-term value for the Company. Sustainability Report Provides an understanding of Kenanga Group’s sustainability ambitions, initiatives and progress, as well as how it is integrated across the business. Supplementary information is available on our website: https://www.kenanga.com.my 50 ANNUAL GENERAL MEETING Date Thursday, 30 May 2024 Time 11:00 a.m. Broadcast Venue Level 19, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur, Wilayah Persekutuan, Malaysia TH Kenanga is committed to making a difference in the environment. Play your part by opting to download a softcopy of our reports at h t t ps :/ /www. kenanga . com.my / i nves t o r - relations/AGM2024 or by scanning the QR code on the left. COVER RATIONALE At Kenanga, we embark on our journey guided by four (4) fundamental values: agility, collaboration, trustworthiness, and future-facing. These values serve as the bedrock of our identity, propelling us forward in our commitment to resilience and innovation in the dynamic landscape of the financial world. The cover of our Sustainability Report symbolises our steady trajectory having achieved market leadership position across all core businesses, and embracing the road ahead with determination and resilience. The blue skies overhead represent the boundless possibilities that await, as we continue to push the boundaries of innovation, driving growth and creating value for our shareholders.
1 INSIDE THIS REPORT 1 ABOUT THIS REPORT Reporting Scope and Boundaries 2 Guidelines and Standards 2 Report Assurance 3 Forward-Looking Statements Disclaimer 3 6 GOOD GOVERNANCE Good Business Conduct 34 Regulatory Compliance 37 7 SUSTAINABLE ECONOMIC GROWTH Responsible Investing 44 Digitalisation 50 Cyber Security 55 Client Experience 57 9 EMPOWERING PEOPLE AND COMMUNITIES Diversity and Inclusion 67 Employee Safety, Health and Wellbeing 74 Talent Attraction, Development and Management 77 Community Investment 84 GRI Content Index 88 Year-on-Year ESG Performance Data 92 Bursa Malaysia Sustainability Reporting Disclosures 97 Independent Limited Assurance Statement 99 10 APPENDIX 2 WE ARE KENANGA Our Statistics at a Glance 4 Our Corporate Structure 5 Our Core Business Segments 6 Our Brand Values 7 Our Notable Recognition in FY2023 8 3 LEADERSHIP STATEMENTS Chairman’s Message 10 Q&A with Our Group Managing Director and Chairman, Group Sustainability Management Committee 13 4 SUSTAINABILITY AT KENANGA Contributing to UN SDGs and UN Global Compact’s Ten Principles 16 Our ESG Framework 18 Our Sustainability Goals and Roadmap 19 An Insight into Our Stakeholders’ Perspectives 21 What is Material to Us 22 5 MANAGING OUR KEY ESG RISKS Managing Our Climate Risk 24 Managing Our Supply Chain Risk 32 8 ENVIRONMENTAL STEWARDSHIP Managing Our Climate Impact 60
2 KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2023 ABOUT THIS REPORT WE ARE KENANGA LEADERSHIP STATEMENTS SUSTAINABILITY AT KENANGA ABOUT THIS REPORT This Report provides an overview of our approach towards managing our stakeholder-relevant environmental, social and governance (“ESG”) topics, goals and performances. Also outlined in this Report, is our progress in integrating sustainability into our strategies, business practises, products, and services to provide long-term value to our stakeholders as we continue to innovate in the marketplace. Following the release of our Sustainability Report in 2022, further enhancements have been made in this year’s disclosures to include Scope 3 disclosure on employee commute. Reporting Scope and Boundaries The contents of this Report encompass full year data for the fiscal year ending December 2023, from 1 January 2023 to 31 December 2023 (“2023” or “FY2023”), which cover our operations in Malaysia, including our Kuala Lumpur-based headquarters - Kenanga Tower, branch offices and other business premises under the Group nationwide, unless stated otherwise. All monetary values are reported in Malaysian Ringgit (“RM”) and this Report should be read in conjunction with our Annual Report 2023. Guidelines and Standards This Report complies with Bursa Malaysia Securities Berhad (“Bursa Malaysia”)’s Main Market Listing Requirements and has been prepared in reference with the Global Reporting Initiative (“GRI”) Standards. The GRI Content Index can be found on pages 88 to 91 of this Report. The Report also serves as a Communication on Progress (“CoP”) report as part of our commitment to UNGC. Bursa Malaysia Sustainability Reporting Guide (3rd Edition) United Nations Sustainable Development Goals (“UN SDGs”) Recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) Joint Committee on Climate Change (“JC3”)’s TCFD Application Guide for Malaysian Financial Institutions Bank Negara Malaysia’s Climate Change and Principle-based Taxonomy (“BNM CCPT”) United Nations Global Compact (“UNGC”)’s Ten Principles Malaysian Code of Corporate Governance (“MCCG”) by the Securities Commissions Malaysia (“SC”) In preparation of this Report, the ESG performance and disclosures were also benchmarked against internationally recognised ESG ratings and frameworks, primarily focusing on Financial Times Stock Exchange (“FTSE”) Russell’s ESG Ratings and industry-relevant Sustainability Accounting Standards Board (“SASB”) indicators, which provide guidance on improving our reporting transparency and disclosures whilst reinforcing our sustainability strategies and direction. The greenhouse gas (“GHG”) emissions were calculated using the GHG Protocol Corporate Standard, an international assurance standard developed by the World Business Council for Sustainable Development and the World Resources Institute (“WBCSD/ WRI”). We have further aligned our ESG disclosures with the following: Kenanga Investment Bank Berhad (“KIBB”) and Its Group of Subsidiaries (“Kenanga Group” or “the Group” or “Kenanga”) presents our third standalone Sustainability Report 2023 (“the Report”), which complements our Sustainability Statement within our Annual Report 2023.
3 MANAGING OUR KEY ESG RISKS GOOD GOVERNANCE SUSTAINABLE ECONOMIC GROWTH ENVIRONMENTAL STEWARDSHIP EMPOWERING PEOPLE AND COMMUNITIES APPENDIX ABOUT THIS REPORT This Report contains certain forward-looking statements relating to future performance where such statements are premised on current assumptions and circumstances, which could change due to various reasons, such as shift of stakeholders’ ESG priorities. Various factors could cause actual results to differ materially from those expressed or implied by these forward-looking statements. As such, the forward-looking statement will be reviewed for its relevancy in our upcoming reports as needed. Forward-Looking Statements Disclaimer Feedback and Accessibility Our Sustainability Report 2023 is also available on our corporate website: https://www.kenanga.com.my/who-we-are/sustainability We welcome all feedback and comments, which can be directed to: Group Marketing, Communications and Sustainability Kenanga Investment Bank Berhad Level 17, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur, Wilayah Persekutuan, Malaysia. Tel : +603-2172 2888 Email : [email protected] SCAN HERE for more information and downloads. Report Assurance The Group Sustainability Management Committee, Group Governance, Nomination & Compensation Committee, Audit Committee, and the Board of Directors have reviewed and approved the Sustainability Report 2023 and Sustainability Statement 2023, and we are continuously refining our data collection process to enhance our disclosures in future reports. To ensure data credibility and in compliance with Bursa Malaysia’s requirements for obtaining reporting assurance, we have engaged SIRIM QAS International Sdn Bhd (“SIRIM”) a prominent Malaysian certification, inspection, and testing body, to provide limited assurance for these selected key indicators for FY2023’s Sustainability Report, including energy management, GHG emissions (Scope 1 and Scope 2), water consumption, employee workforce profile, as well as training and development data. This marks our first year of acquiring independent verification for ESG reporting data and we plan to broaden the assurance scope for future reports. For full SIRIM Independent Assurance Statement, please refer to pages 99 to 101 of this report. The level of data accuracy included in Kenanga Investment Sustainability Report 2023 is fairly stated; The level of disclosure of the selected sustainability performance information presented in the report was found to be properly prepared; The personnel responsible were able to demonstrate the origin(s) and interpretation of data contained in the report. Extraction from SIRIM Independent Assurance Statement Based on the scope of the assessment process and evidence obtained, nothing has come to our attention that causes us to believe that Kenanga Investment has not complied, in all material respects, with the referred assurance standard and guide. The following represents SIRIMQAS International’s opinion:
4 KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2023 ABOUT THIS REPORT WE ARE KENANGA LEADERSHIP STATEMENTS SUSTAINABILITY AT KENANGA WE ARE KENANGA Over 500,000 Clients Celebrated 50 Years on 9 June 2023 Over 1,300 Employees 34 Branches Over 6,500 Licensed Representatives Kenanga Investment Bank Berhad is a leading, independent, Malaysian-based investment bank established in 1973. We have provided award-winning products and services to clients and businesses for more than five decades, through our wealth of experience in equity broking, corporate investment banking, treasury, Islamic banking, listed derivatives broking, asset and wealth management, and money lending. In this new era of finance that is centered on digitalisation and new technologies, it is vital that we continue to reimagine and reshape our products and offerings to meet the demands and expectations of our clients and the market. Our pursuit of democratising investing through digitalisation has seen us unlock innovative solutions such as, Malaysia’s first fully online stockbroking platform, Rakuten Trade which is a joint venture with Japan-based Rakuten Securities Inc., as well as Kenanga Digital Investing (“KDI”), a fully Artificial Intelligence (“AI”)-driven robo-advisory platform that was launched in 2022. We are currently developing Malaysia’s first Wealth SuperApp and we look forward to its rollout in 2024. OUR LOCATI ONS 5 2 1 2 1 4 1 1 1 1 2 1 1 2 1 3 1 1 1 1 1 Kenanga Investment Bank Berhad Kenanga Investors Group HQ Johor Pahang Sabah Sarawak Perak Selangor Penang Negeri Sembilan Melaka Kuala Lumpur Revenue RM 821.1 million Profit Before Tax RM 88.1 million Net Profit RM 72.8 million Financial Performance Our Statistics at a Glance
5 MANAGING OUR KEY ESG RISKS GOOD GOVERNANCE SUSTAINABLE ECONOMIC GROWTH ENVIRONMENTAL STEWARDSHIP EMPOWERING PEOPLE AND COMMUNITIES APPENDIX CORPORATE STRUCTURE Kenanga Investment Bank Berhad Registration No. 197301002193 (15678-H) 100% Kenanga Capital Sdn Bhd Registration No. 199701024604 (440102-V) 20% Kenanga Capital Islamic Sdn Bhd Registration No. 201101010778 (938908-X) 100% Kenanga Private Equity Sdn Bhd Registration No. 199701007563 (423059-P) 100% Kenanga Management & Services Sdn Bhd Registration No. 198001007478 (61262-V) 100% Kenanga Nominees (Tempatan) Sdn Bhd Registration No. 197301003326 (16778-M) 100% Kenanga Nominees (Asing) Sdn Bhd Registration No. 199301025305 (280043-U) ECML Berhad Registration No. 193001000016 (682-X) 100% 100% Kenanga Digital Sdn Bhd Registration No. 193801000015 (938-T) 29.6% Al Wasatah Al Maliah Company (Incorporated in the Kingdom of Saudi Arabia) Registration No. 1010241832 100% K & N Kenanga Holdings Berhad Registration No. 199401017181 (302859-X) 50% Rakuten Trade Singapore Pte Ltd (Incorporated in Singapore) Registration No. 201433886E 50% Rakuten Trade Sdn Bhd Registration No. 199301011963 (266701-P) 100% Avenue Kestrel Sdn Bhd Registration No. 198301001914 (97150-A) 100% Kenanga Futures Sdn Bhd Registration No. 199501024398 (353603-X) 100% 45% SSSB Management Services Sdn Bhd Registration No. 199101009010 (219322-W) Kenanga Investment Corporation Ltd (Incorporated in Sri Lanka) Registration No. PB300 100% Kenanga Investors Berhad Registration No. 199501024358 (353563-P) 100% Eq8 Capital Sdn Bhd (Formerly known as i-VCAP Management Sdn Bhd) Registration No. 200701034939 (792968-D) 100% KUT Nominees (Asing) Sdn Bhd Registration No. 200201001939 (569602-K) 100% KUT Nominees (Tempatan) Sdn Bhd Registration No. 200201001942 (569605-D) 100% Kenanga Islamic Investors Berhad Registration No. 199701036457 (451957-D) Kenanga Trustees Berhad (Formerly known as Kenanga Funds Berhad) Registration No. 200301017657 (620077-K) Note: All the above companies are incorporated in Malaysia, except for Kenanga Investment Corporation Ltd, Al Wasatah Al Maliah Company and Rakuten Trade Singapore Pte Ltd 20% 20% 20% 20% 20%
6 KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2023 ABOUT THIS REPORT WE ARE KENANGA LEADERSHIP STATEMENTS SUSTAINABILITY AT KENANGA OUR CORE BUSINESS SEGMENTS Kenanga provides a host of products and services to serve corporations, institutions, and individuals. BUSINESS SEGMENTS Equity Broking Corporate Investment Banking Treasury Islamic Banking Listed Derivatives Broking Asset and Wealth Management Money Lending
7 MANAGING OUR KEY ESG RISKS GOOD GOVERNANCE SUSTAINABLE ECONOMIC GROWTH ENVIRONMENTAL STEWARDSHIP EMPOWERING PEOPLE AND COMMUNITIES APPENDIX OUR CORE BUSINESS SEGMENTS We service the investing and trading needs of retail and institutional investors, both domestic and international. These services consist of equity brokerage, global equity trading, structured warrants, equity structured solutions, securities borrowing and margin lending. We offer services including corporate banking, corporate finance, debt capital markets, and private equity. We offer a comprehensive array of investment and hedging solutions. In addition, we have a team responsible for delivering input on indicative prices or levels and market updates for the money, fixed income, and foreign exchange market. We provide Shariah-compliant investment banking services and products. All Kenanga’s Skim Perbankan Islam and Islamic Stockbroking Window products are sanctioned by its Shariah Committee in accordance with regulatory mandates. We offer clearing and settlement services and access to trade on Bursa Malaysia Derivatives Berhad and the world’s leading derivatives exchange, the Chicago Mercantile Exchange Group. We offer conventional and Shariah-compliant investment solution, compromising collective investment schemes, private retirement schemes, portfolio management services, and alternative investments, to retail, corporate and high-net worth individual clients. We provide financing solutions through a wide variety of individually tailored corporate and leverage finance products. OUR BRAND VALUES AGILITY We are nimble and quick to respond with creative, customised solutions to meet our stakeholders’ needs, both externally and internally. TRUSTWORTHINESS Professionalism, integrity and transparency are values we hold dear. We are fully committed to ethical practices and strive to always maintain credibility in all that we do. COLLABORATION We are supported by an integrated network of colleagues and partners. We believe in consolidating our knowledge and working together for the best solutions. FUTURE FACING We are constantly pushing boundaries. Our pursuit of digital innovations will drive financial inclusion and create opportunities and possibilities for our stakeholders. For more information about our business activities, please refer to pages 2 to 4 of our Annual Report 2023.
8 KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2023 ABOUT THIS REPORT WE ARE KENANGA LEADERSHIP STATEMENTS SUSTAINABILITY AT KENANGA OUR NOTABLE RECOGNITION IN FY2023 KENANGA INVESTMENT BANK BERHAD The Edge Malaysia Centurion Club Corporate Awards 2023 Financial Services Category • Highest Returns to Shareholders Over Three Years • Highest Growth in Profit After Tax Over Three Years National Energy Awards 2023 • Winner of Energy-Efficient Building in Retrofitted Building Malaysia National Business Award 2023 • Investment Banking Malaysia Technology Excellence Award 2023 • Fintech – Investment Banking United Nations Global Compact Malaysia-Brunei Forward Faster Sustainability Awards 2023 Recognition for: • Partnership for the Goals • Sustainability Awareness and Employee Engagement ESG Positive Impact Awards 2022 • Silver Award in the Innovative Partnership Category Bursa Excellence Awards 2023 • Best Overall Equities Participating Organisation (Champion) • Best Retail Equities Participating Organisation (Investment Bank) (Champion) • Best Online Retail Participating Organisation (Champion) Bursa Retail Investor Campaign 2023 Top Remisier Category • Highest Number of New Accounts Opened (Shariah): Ahmad Faizal bin Mohamed Yusup • Highest Traded Value – New Accounts: Ooi Yim Ee • Highest Reactivation – Untraded Accounts: Yasmin Mae Abdul Karim SRP Asia Pacific Awards 2023 • Best Educational Initiative The Edge Best Call Awards 2023 • Samuel Tan Kai Bin’s timely downgrade of D&O Green Technologies Bhd and SKP Resources Bhd • Nigel Ng Ken Hou’s call on United U-Li Corp Bhd Focus Economics Analyst Forecast Awards 2023 • Kenanga Research, Third Place in Malaysia – Interest Rate Category Sustainability & CSR Awards 2023 • Bank of the Year – Outstanding Sustainability Champion
9 MANAGING OUR KEY ESG RISKS GOOD GOVERNANCE SUSTAINABLE ECONOMIC GROWTH ENVIRONMENTAL STEWARDSHIP EMPOWERING PEOPLE AND COMMUNITIES APPENDIX OUR NOTABLE RECOGNITION IN FY2023 KENANGA INVESTORS BERHAD KENANGA FUTURES SDN BHD FSMOne Recommended Unit Trust Awards 2023/2024 LSEG Lipper Fund Awards Malaysia 2024 Asia Asset Management’s 2024 Best of the Best Awards Sector Equity – Malaysia Focused Sector Equity – Malaysia Small to Medium Companies (Islamic) Private Retirement Scheme – Growth (Islamic) Best Equity Malaysia Diversified – Malaysia Pension Funds over 10 Years Best Mixed Asset MYR Flexible – Malaysia Pension Funds over 10 Years Malaysia Best Impact Investing Manager Best Impact Investing Manager in ASEAN Malaysia Best Equity Manager Malaysia CEO of the Year Malaysia CIO of the Year Malaysia Best House for Alternatives Malaysia Most Improved Fund House Malaysia Best Investor Education Kenanga Growth Fund Series 2 Kenanga Shariah Growth Opportunities Fund Kenanga Shariah OnePRS Growth Fund Kenanga Malaysian Inc Fund Kenanga Diversified Fund Kenanga Investors Berhad Kenanga Investors Berhad Kenanga Investors Berhad Datuk Wira Ismitz Matthew De Alwis, Executive Director and Chief Executive Officer, Kenanga Investors Berhad Lee Sook Yee, Chief Investment Officer, Kenanga Investors Berhad Kenanga Investors Berhad Kenanga Investors Berhad Kenanga Investors Berhad Bursa Excellence Awards 2023 • Best Overall Derivatives Trading Participant (Champion) • Best Trading Participant Commodity Derivatives (Champion) • Best Institutional Derivatives Trading Participant (Champion)
10 KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2023 ABOUT THIS REPORT WE ARE KENANGA LEADERSHIP STATEMENTS SUSTAINABILITY AT KENANGA Celebrating the 50th anniversary of Kenanga Investment Bank Berhad this year and half a century of excellence as a homegrown brand, we are pleased to witness the transformative journey of our sustainability efforts in recent years, evolving in tandem with global and local sustainability imperatives. The paradigm shift towards climate-resilient business operations, enhanced ESG reporting, and increased transparency resonates profoundly, compelling the Group to continue aligning its ESG undertakings with both international and domestic benchmarks. STRENGTHENING ESG FOUNDATION In 2023, we rolled out the first year of our three (3)-year Sustainability Roadmap, designed to guide our ESG planning and execution, predicated on our Sustainability Framework that was formulated two (2) years ago. With a focus on ‘Strengthening ESG Foundation’, the year saw further integration of Sustainability Key Performance Indicators (“KPIs”) CHAIRMAN’S MESSAGE I am pleased to share with you the Sustainability Report for 2023, which illustrates our ongoing dedication to environmental, social and governance (“ESG”) initiatives and our progress toward fostering a sustainable future. DEAR SHAREHOLDERS, throughout the organisation, and preparing for climate-related financial disclosures to align with regulatory mandates. We also prioritised enhancing the skills of roles crucial to sustainability, recognising the pivotal role of human capital in our sustainability endeavours. Additionally, in meeting regulatory requirements and to promote further transparency and build trust with our stakeholders, we have initiated for the first time, independent assurance of key disclosures within this Sustainability Report. Further to this, as part of our commitment to further embed and solidify sustainability leadership at the Board level, we updated and expanded the Board Charter and Terms of Reference of Board Committees to formalise Board oversight on matters relating to climate-related risks, underscoring our dedication to not only addressing current challenges but also fostering a climate-resilient business ecosystem. Central to the Group’s operations is a persistent focus on maintaining the highest standards of good governance. In 2023, our Whistleblowing Policy was refined to include a comprehensive Speak Up Framework and a Speak Up Policy that lays the foundation for the Framework and provides, amongst others, assurance to all relevant stakeholders, both internal and external, of the safeguards accorded when making a report in good faith and that all reports will be handled objectively and impartially.
11 MANAGING OUR KEY ESG RISKS GOOD GOVERNANCE SUSTAINABLE ECONOMIC GROWTH ENVIRONMENTAL STEWARDSHIP EMPOWERING PEOPLE AND COMMUNITIES APPENDIX CHAIRMAN’S MESSAGE As part of this stride forward in promoting an ethical culture, an independent whistleblowing solutions provider was appointed to implement Conduct Watch, a secure digital reporting channel. In tandem with that, our annual flagship campaign, the Fraud Awareness Week (“FAW”), celebrated its seventh year in uniting hundreds of participants from regulatory bodies to professional entities and public listed companies, in a collaborative endeavour against fraud. The consistent increase in participation not only attests to the relevance of the event, but also accentuates its profound impact. This year, for the first time, we also broadened our reach and collaborated with the esteemed Faculty of Law, University of Malaya (“UM”) on a Fraud Awareness Talk session aimed at enhancing awareness of fraud prevention and detection within the local community, particularly amongst the students of UM’s Law Faculty. At Kenanga, we have always taken great pride in upholding a gender-balanced workforce within the organisation. With 51% female employees and 38% in senior leadership positions, we have not only cultivated a harmonious blend of diverse perspectives and experiences but have also harnessed the advantages of a rich talent pool. This year, as we deepened our commitment, Kenanga proudly joined the ranks of signatories to the UN Women’s Empowerment Principles. This move signifies our efforts to empower women not only within our workplace, but also in the broader marketplace and community. A FOCUS ON CLIMATE ACTION Embarking on a journey towards net-zero aspirations, we have in recent years invested considerable efforts in mitigating our carbon footprint and environmental impact. As such, we were incredibly heartened to receive the coveted accolade at the prestigious National Energy Awards 2023 for the ‘EnergyEfficient Building in the Retrofitted Building’ category, a validation of the substantial strides we have made in reducing our energy consumption at our headquarters, Kenanga Tower. Through partnership with a Malaysian-based climate-tech solutions provider, we have undergone a transformative process, revamping both the lighting and air handling unit and air conditioning systems of our building to achieve energy efficiencies. This initiative is a crucial step in aligning our operations with sustainable practices and contributing to a greener future. Additionally, we remain vigilant in complying with emerging regulations and standards, particularly in climate risk management, ensuring its seamless integration into our business operations. FOSTERING A CULTURE OF SUSTAINABILITY Throughout the year, we embraced the principle of ‘leaving no one behind’ as we worked towards building a stronger ecosystem to advance our sustainability agenda. Acknowledging the pivotal role of employees in advancing sustainability, the Group initiated its inaugural Sustainability Roadshow, rolled-out to communicate Kenanga’s sustainability journey, and raise awareness of the Group’s ESG progress and aspirations. This roadshow not only advocated the positive impact of our collective efforts, but more importantly, served to nurture a culture of responsibility and sense of purpose amongst all employees. Complementing that was the annual #GreenAtWork environmental campaign, and a new #ThinkESG learning series designed to inspire deeper ESG understanding and the adoption of green practices in the daily lives of our employees. Through workshops, quizzes and a plant-adoption drive, employees were invited to become ambassadors of positive change, carrying the values of environmental stewardship and ESG thinking beyond the confines of our organisation. Together, we do not just cultivate a greener workplace; we are sowing the seeds for a more sustainable future. For our clients, we hosted ESG webinars and organised experiential site visits throughout the year, including trips to rooftop solar installations and Electric Vehicle (EV) charging hubs. These efforts aimed to offer first-hand insights into sustainable practices, empowering our corporate and institutional clients with opportunities to evaluate the ESG performances of companies, and in turn, enables them to actively champion their sustainability ambitions through informed decision-making. As part of our steadfast commitment to societal impact, our long-standing partnerships with social enterprises such as Silent Teddies Bakery and Dialogue IncludesAll (“DIA”) Academy of over 12 years, exemplify our dedication to championing sustainable values and reflect a shared ethos of empowerment and resilience. Beyond being regular patrons of Silent Teddies Bakery, an establishment run by hearing-impaired youths, we have also been actively supporting their ongoing expansion and renovation efforts — where we will see the humble bakery transformed into a well-equipped learning centre for the hearing impaired, and a café catering to a broader audience. It has been remarkable to witness the progress they have made in growing their business, highlighting the distance they have covered since our initial collaboration.
12 KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2023 ABOUT THIS REPORT WE ARE KENANGA LEADERSHIP STATEMENTS SUSTAINABILITY AT KENANGA LOOKING FORWARD EXPANDING THE VISION 2023 has been an enlightening year, marked by significant advancements in ESG reporting standards and regulations. The establishment of the Advisory Committee on Sustainability Reporting and the launch of the National Energy Transition Roadmap, New Industrial Master Plan and i-ESG Framework underscore the Malaysian government’s commitment to sustainability. These national developments have been instrumental in further guiding our efforts to strengthen our sustainability foundations as we move forward. As we reflect on our journey, I extend my deepest appreciation to our Founder Emeritus and Adviser, YM Tan Sri Dato’ Paduka Tengku Noor Zakiah Tengku Ismail, and convey my heartfelt thanks to our devoted employees and loyal clients. Their unwavering trust and support have been crucial to our success and will continue to inspire our sustainability path forward. Additionally, my deepest thanks go to the dedicated Group Sustainability Management Committee led by Datuk Chay Wai Leong and employees of Kenanga Group. Their exceptional service and tireless commitment in these challenging times have further solidified and enriched the values that define the essence of Kenanga Group. Finally, I extend my appreciation to our esteemed clients, business partners, suppliers, and shareholders for entrusting the Group. A special acknowledgment goes to Bank Negara Malaysia, Bursa Malaysia Securities Berhad, and the Securities Commission Malaysia for their invaluable advice and steadfast support. TAN SRI DATO’ SERI SYED ANWAR JAMALULLAIL Chairman CHAIRMAN’S MESSAGE Simultaneously, through the DIA Academy, our asset and wealth management arm, Kenanga Investors Berhad, organised immersive empathy workshops for their teams and network of financial advisers. Led by visually impaired trainers from the Academy, these structured workshops aimed to promote inclusivity, sense of community and mutual support through exercises, discussions and activities. Participants engaged in these events in complete darkness, where they learnt, practiced, and internalised empathy as a valuable skill for fostering meaningful connections and resolving conflicts, which will set the tone for a more compassionate and understanding environment in both personal and professional settings. These represent just a few noteworthy moments from the year. Our sustainability endeavours are seamlessly woven into our business operations, and are intricately aligned with the United Nations Sustainable Development Goals (“UN SDGs”) and United Nations Global Compact Ten Principles. For a deeper understanding of our sustainability performance, I invite you to explore the following pages of this report, where you will find a more comprehensive overview of our efforts. CONTINUED INCLUSION ONTO THE FTSE4GOOD INDEX Witnessing Kenanga’s sustainability journey marked by a consistent stream of notable commendations, serves as a testament to our ongoing efforts and encourages us to strive for continuous improvement. In December 2023, Kenanga maintained its inclusion in the esteemed FTSE4Good Bursa Malaysia (“F4GBM”) Index, a globally recognised benchmark for companies demonstrating a commitment to ESG practices. This recognition continues to place us amongst the 10% of Malaysian publicly listed companies represented in the Index, further underscoring our steadfast dedication to sustainability and responsible business practices. Throughout 2023, Kenanga was also decorated with prestigious awards acknowledging our dedication to sustainability and ESG practices. In addition to the above-mentioned National Energy Awards, we also garnered accolades, such as ‘Bank of the Year - Outstanding Sustainability Champion’ from the Sustainability & CSR Malaysia Awards and recognition as ‘Best Impact Investing Manager’ by Asia Asset Management. Meanwhile, the United Nations Global Compact Network Malaysia and Brunei awarded us with ‘Partnership for the Goals’ and ‘Sustainability Awareness and Employee Engagement’ recognitions. These acknowledgments stand as a tribute to the tireless commitment and dedication of everyone within the organisation. Whilemaintaining our inclusion in the F4GBM Index and the receipt of these awards are significant milestones, we acknowledge that there is still much ground to cover, and we are merely at the onset of our journey.
13 MANAGING OUR KEY ESG RISKS GOOD GOVERNANCE SUSTAINABLE ECONOMIC GROWTH ENVIRONMENTAL STEWARDSHIP EMPOWERING PEOPLE AND COMMUNITIES APPENDIX Q&A WITH OUR GROUP MANAGING DIRECTOR AND CHAIRMAN, GROUP SUSTAINABILITY MANAGEMENT COMMITTEE How would you describe the sustainability progress that the Group has made this year? Q1 Has climate change impacted Kenanga’s management of ESG risks? Q2 With the development of a Sustainability Framework, Three (3)-Year Roadmap and Sustainability Goals in previous years, we were laser-focused on execution this year, bringing to life the plans and targets we have set in place. Within the organisation, we cascaded ESG-specific KPIs throughout the organisation, rolled out Sustainability Roadshows for employees, refined our whistleblowing policy, augmented our procurement policy and worked on a sustainability policy to ensure we have a strong foundation that paves way for our journey ahead. It was also a year of ensuring we internalised the heightened regulatory requirements from Bank Negara Malaysia, Bursa Malaysia, as well as the Securities Commission in relations to integrating sustainability practices in our business. On the commercial front, we stepped up engagement with clients and investee companies to further push the sustainability agenda. Our asset and wealth management arm, Kenanga Investors Berhad, has successfully secured two (2) exclusive landmark ESG mandates from notable institutional investors in the country, which is a testament to the strength of our expertise and bolsters our position as a trusted asset manager in the sustainability space. Another tangible mark of progress is our continued inclusion onto the FTSE4Good Bursa Malaysia Index. In the latest December 2023 review, our FTSE4Good ESG score has increased from 3.7 to 4.0, a direct result of our enhanced ESG practices and disclosures. Climate change has emerged as a significant factor influencing the management of ESG risks at Kenanga. The implications of climate change are far-reaching, affecting not only the environment but also posing potential risks and opportunities for businesses. Our regulators, especially Bank Negara Malaysia is at the forefront of setting regulatory standards, including mandating the assessment and disclosures of climaterelated risks by financial institutions such as ourselves. In response to this heightened regulatory scrutiny and increased investor awareness of climate risks, we have intensified our risk management approach which includes strengthening our climate risk governance and enhancing due diligence to include climate risk considerations in decisions related to the investments and corporate lending. Since 2023, our portfolios undergo ESG risk screening and climate-related exposure assessment as guided by the updated Climate Change Risk Management (“CCRM”) Framework. DATUK CHAY WAI LEONG Group Managing Director Chairman, Group Sustainability Management Committee
14 KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2023 ABOUT THIS REPORT WE ARE KENANGA LEADERSHIP STATEMENTS SUSTAINABILITY AT KENANGA Q&A WITH OUR GROUP MANAGING DIRECTOR AND CHAIRMAN, GROUP SUSTAINABILITY MANAGEMENT COMMITTEE In light of current environmental concerns, would you be able to provide an overview of climate actions that the company is pursuing? In 2023, global temperatures reached unprecedented levels, marking it as the hottest year on record, and highlighting evidence of global warming and changing weather patterns. Mounting scientific consensus of climate change, compounded with the escalating frequency of climate emergencies has reinforced the imperative for businesses such as ours to address the associated risks, as well as taking the opportunity to contribute meaningfully to a sustainable future. At Kenanga, while we have aligned our long-term environmental commitment with our national goal of achieving net zero by 2050, our immediate focus has been to prioritise the reduction of our enterprise GHG emission. Over the last two (2) years, we have been collaborating with a Malaysian-based climate tech company to mitigate our environmental footprint, starting with the most energy intensive area – our heating, ventilation and air conditioning system. We have overhauled our systems with an AI-powered predictive cooling control solutions, as well as switched out conventional lightings to energy-saving lighting options. Our gradual and practical steps led to reduction in overall energy consumption in 2022 at Kenanga Tower. This achievement, attributable to the system upgrades initiated in 2021, which earned us the prestigious title of ‘Energy-Efficient Retrofitted Building’ at the National Energy Awards 2023, presented by the Ministry of Natural Resources, Environment, and Climate Change. Q3 What would you say are the highlights of Kenanga’s progress on the “Social” and “Governance” dimensions? By virtue of the fact we operate in a highly regulated environment, governed by all three (3) regulatory bodies – Bank Negara Malaysia, Bursa Malaysia and the Securities Commission – we naturally uphold a high corporate governance standard. We take great pride in going above and beyond regulatory compliance, especially through our industry leadership role in rallying fraud awareness. We cover the many facets of ‘Social’ in our Sustainability Report, but it is worth noting that our priorities include maintaining a gender-balanced workforce. This year, we became a signatory to the United Nations Women Empowerment Principles, further committing to gender empowerment agenda not just at the workplace, but also the marketplace and community. Our long-standing support towards social enterprises, Silent Teddies Bakery and Dialogue Includes All Academy, continues to be front and centre for us. It has been a privilege to be part of their growth story, and to know we have played a part in empowering the differently abled and marginalised in a meaningful manner that promotes a sense of pride and unlocks self-reliance and enterprising spirit. Q4 Having charted good progress in the last few years, what are some of the focus areas in the coming year? In this coming year, amongst the various priorities include strengthening and harmonising of our responsible investing approach across the Group by aligning it to regulatory expectations, and industry best practices. In the same breath, we will also delve into the technical aspects of computing our Scope 3 emissions, particularly focusing on emissions resulting from our investment activities – the area where, as a financial institution, we have the most impact. One thing to be mindful of as we progress forward, is the rise of greenwashing allegations, which is why ensuring transparency, clarity and integrity of our commitments, disclosures and communications remains paramount. Q5
15 MANAGING OUR KEY ESG RISKS GOOD GOVERNANCE SUSTAINABLE ECONOMIC GROWTH ENVIRONMENTAL STEWARDSHIP EMPOWERING PEOPLE AND COMMUNITIES APPENDIX Q&A WITH OUR GROUP MANAGING DIRECTOR AND CHAIRMAN, GROUP SUSTAINABILITY MANAGEMENT COMMITTEE In the latest December 2023’s review of the FTSE4Good Index series, Kenanga Group has maintained its position and demonstrated improvement in its overall ESG ratings. In the review, the Group achieved an overall ESG score of 4.0 out of 5.0, showing an increase from our previous rating of 3.7. The progress is primarily attributed to the enhanced performance in climate change-related topics within the Environmental pillar, while maintaining our perfect scores for the Governance pillar and high score for our Social pillar. Furthermore, Kenanga has surpassed the sector average scores, reflecting our ongoing commitment to align our business operations with sustainable and responsible practices. Constituent of F4GBM index for the 2nd consecutive year Top 11 in Percentile Ranking Improved ESG Score to 4.0 from 3.7 a year ago, ahead of the overall financial services sector’s average score of 2.6 “2024 will be the year where we focus on building and bolstering a sustainable ecosystem with a more pronounced emphasis on efforts relating to climate change and social supply chain. By aligning our sustainability efforts with these critical themes, we not only fortify our resilience against emerging risks but also positioning ourselves in accordance with prevailing regulatory mandates.” CHUAH SZE PHING Group Chief Sustainability Officer and Head of Group Marketing and Communications, Kenanga Investment Bank Berhad FTSE4Good Bursa Malaysia (“F4GBM”) Index December 2023 Review Results
16 KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2023 ABOUT THIS REPORT WE ARE KENANGA LEADERSHIP STATEMENTS SUSTAINABILITY AT KENANGA SUSTAINABILITY AT KENANGA As a financial institution, we acknowledge the significant role we play in contributing to the development of a sustainable future. Our commitment is rooted in integrating sustainability into our operations, generating shared value for all stakeholders. We consistently incorporate sustainability into our business practices and decision-making processes, recognising it as both a driver of risks and a source of opportunities. CONTRIBUTING TOWARDS UN SDGS AND UN GLOBAL COMPACT’S TEN PRINCIPLES Below are the 11 SDGs Kenanga contributes towards. Additionally, as a signatory member of the United Nations Global Compact (“UNGC”) Network, we have also aligned our sustainability efforts with the UNGC’s Ten Principles. Key highlights are illustrated below: UN SDGs SDGs Targets We Contribute Towards Relevant UNGC Principles Our Contribution to UN SDGs and UNGC Ten Principles Our Progress in FY2023 1.4 Equal rights to economic resources, as well as access to basic and financial services Principle 1: Business should support and respect the protection of internationally proclaimed human rights • Extending support to our local communities through philanthropic contributions and social investments • Supporting social enterprises through our community investment efforts • Donated over RM600,000 to community investments, positively impacting over 2,700 lives • Provided consistent support to social enterprise partners, Silent Teddies and Dialogue Includes All Academy for 12 consecutive years 4.4 Increase the number of people with relevant skills for employment, decent jobs and entrepreneurship Principle 1: Business should support and respect the protection of internationally proclaimed human rights • Promoting financial literacy across the industry through our community programmes and industry financial literacy initiatives • Participated in and organised 119 sessions (webinars, exhibitions, seminars and live series) for approximately 8,000 participants 5.5 Women’s full and effective participation and equal opportunities for leadership Principle 6: The elimination of discrimination in respect of employment and occupation • Supporting the empowerment and representation of women in our workforce • 51% of our workforce and 38% of key/ senior management are women • Gender pay ratio averages 1:0.92 (men to women) 7.2 Increase global percentage of renewable energy 7.3 Double the global rate of improvement in energy efficiency Principle 9: Encourage the development and diffusion of environmentally friendly technologies • Investing in green energy companies and converting to energy-efficient equipments in efforts to reduce our energy consumption in our building and business operations • Kenanga Tower wins ‘Energy-Efficient Retrofitted Building’ at National Energy Awards 2023 8.5 Full and productive employment and decent work for all 8.10 Expand access to banking, insurance and financial services for all Principle 2: Make sure that they are not complicit in human rights abuses Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining Principle 4: The elimination of all forms of forced and compulsory labour Principle 5: The effective abolition of child labour Principle 6: The elimination of discrimination in respect of employment and occupation • Ensuring a safe, conducive and thriving workplace for all our employees • Expanding our client base, particularly the unserved/ underserved retail segment via online platforms for trading and investing • Achieved zero workplace injuries • Conducted three (3) mental health talks for employees in collaboration with Naluri, MiCare and Etiqa • Reached over 23,000 users through our AI-based investing and savings platform, Kenanga Digital Investing (“KDI”) 10.2 Social, economic and political inclusion of all Principle 6: The elimination of discrimination in respect of employment and occupation • Uplifting our communities through philanthropic contributions and employee volunteerism, while promoting diversity and nondiscriminatory practices across our employment practices and product • Became a signatory of Women’s Empowerment Principles (“WEPs”) • Became an Official Partner of LeadWomen, a leading advisory and training organisation focused on nurturing an inclusive workplace culture • Conducted a training for people managers on sexual harassment and anti-bullying by an external legal counsel • Recorded a total of 2,423 employee volunteering hours, with participation from 319 volunteers 11.6 Reduce the environmental impact of cities Principle 8: Undertake initiatives to promote greater environmental responsibility • Improving our waste management initiatives through monitoring on waste generated and collected • Continued to improve monitoring on waste management in line with Bursa Malaysia’s reporting requirements
17 MANAGING OUR KEY ESG RISKS GOOD GOVERNANCE SUSTAINABLE ECONOMIC GROWTH ENVIRONMENTAL STEWARDSHIP EMPOWERING PEOPLE AND COMMUNITIES APPENDIX SUSTAINABILITY AT KENANGA UN SDGs SDGs Targets We Contribute Towards Relevant UNGC Principles Our Contribution to UN SDGs and UNGC Ten Principles Our Progress in FY2023 12.5 Significantly reduce waste generation 12.6 Encourage companies to adopt sustainable practices and sustainable reporting Principle 8: Undertake initiatives to promote greater environmental responsibility • Embracing digitalisation throughout our operations and moving towards minimising paper usage • Nurturing a zero-waste culture amongst our employees by organising workshops and purchasing eco-friendly products • Digitalised four (4) workflows under the iLeap project, reducing paper wastage and enhancing workflow efficiency with a total of 69 workflows being digitalised since its inception • Collaborated with environmental non-governmental organisations to encourage employees to participate in activities such as repurposing plastics, city clean up and plant adoption drive • Recycled a total of 32,876kg, inclusive of general waste and e-waste 13.2 Integrate climate change measures into policies and planning 13.3 Improve human and institutional capacity on climate change Principle 7: Businesses should support a precautionary approach to environmental challenges • Embarking on a climate action pathway to address our climate-related risks and opportunities, while reducing our direct operational carbon footprint • Completed climate risk assessments for all of our existing corporate loans and private equity investments • Achieved 393 employee enrolments in ESG-related training topics, such as ESG-related risks, climate change, with a total of 2,239.7 training hours recorded 16.4 Combat organised crime, illicit financial and arms flows 16.5 Reducing all forms of corruption and bribery 16.7 Responsive, inclusive, participatory and representative decision-making at all levels Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery • Strengthening our framework and compliance culture to prevent financial crimes • Conducted our 7th annual Fraud Awareness Week (“FAW”) campaign, engaging over 2,300 participants • Collaborated with the Law Faculty of the University of Malaya on a Fraud Awareness Talk session aimed at enhancing awareness of fraud prevention and detection • Hosted the 8th Annual Regulatory Seminar Assessment, with over 1,100 enrolments and a total of 8,932 training hours registered • Established a Scam Hotline to channel and manage all scam-related concerns • Enhanced Group Whistleblowing Policy by replacing it with the Group Speak Up Policy, allowing employees to report concerns in good faith regarding behaviour, conduct, practices, actions or omissions that may be unlawful or not in line with the Group’s policies 17.16 Enhance partnership to mobilise technology and financial resources 17.17 Encourage and promote effective public, publicprivate and civil society partnership Principle 1: Business should support and respect the protection of internationally proclaimed human rights Principle 2: Make sure that they are not complicit in human rights abuses Principle 6: The elimination of discrimination in respect of employment and occupation Principle 7: Businesses should support a precautionary approach to environmental challenges Principle 8: Undertake initiatives to promote greater environmental responsibility Principle 9: Encourage the development and diffusion of environmentally friendly technologies Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery • Building partnerships with community-based organisations to create positive social impacts • Strengthened key partnerships with the following entities: - Silent Teddies and Dialogue Includes All Academy for community outreach programmes - UNGC to advance SDGs - Association of Certified Fraud Examiners to organise the 7th FAW - LeadWomen to promote workplace equality - Ant Group for financial inclusion initiatives
18 KENANGA INVESTMENT BANK BERHAD SUSTAINABILITY REPORT 2023 ABOUT THIS REPORT WE ARE KENANGA LEADERSHIP STATEMENTS SUSTAINABILITY AT KENANGA SUSTAINABILITY AT KENANGA OUR ESG FRAMEWORK Our ESG Framework serves as a focal point for how we articulate our sustainability aspirations for the long-term. Anchored upon four (4) key pillars – Sustainable Economic Growth, Environmental Stewardship, Empowering People and Communities, and Good Governance, the Framework guides us in our efforts to address ESG issues that are material to our business. OUR SUSTAINABILITY VISION As a leading independent investment bank, Kenanga is committed to promoting and adopting business-relevant sustainable practices by embedding ESG in our core business strategies and operations, while considering the ESG risks and opportunities in shaping up sustainable investment products and services towards contributing to the best interests of our stakeholders. Sustainable Economic Growth Integrate ESG factors into our business decisions and value chain and manage our ESG risks and opportunities as we innovate to build a sustainable future Empowering People and Communities Create a positive impact on our employees, clients, and business associates, as well as communities in need Environmental Stewardship Promote climate positive culture within the organisation and relevant external stakeholders to attain a low carbon economy Good Governance Lead a responsible business underpinned by a robust compliance culture and high levels of ethical standards Responsible Investment Incorporate ESG factors into our investment processes, offer and promote sustainable products and solutions and take an active stewardship role in the companies in which we invest Digitalisation Leverage technological advancements to develop secure, meaningful and innovative products and solutions that will help shape the future investing Diversity, Inclusion and Wellbeing Inculcate an equitable workplace culture that recognises the unique needs and contributions of employees and where employee rights, health, safety and wellness are promoted Community Investment Enhance financial literacy for investors and the community through education. Reaching out to communities in need through targeted social investments and employee volunteerism Climate Impact Take ownership of climate risks and opportunities of our operations through monitoring environmental performance, identifying and practising behaviours to promote climate positive action and outcomes Good Business Conduct Promote and embed good business conduct and high standards of integrity throughout the organisation, operate ethically and transparently and in compliance with applicable laws and regulations
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