POWERING THE FUTURE WITH FINANCING FOR GREEN TECH SMES

GREEN technology small and medium enterprises (SMEs) often face challenges in securing financial support to expand their market share due to a limited track record, perception of high risks involved in new technologies or newer business models, and limited access to collateral.

This prevents many green technology SMEs from contributing to the transition towards a Net Zero economy.

This is where CIMB plays a role in supporting green technology SMEs to bridge the financing gap and meet the increasing demand for sustainable practices, spurring the green economy in line with Malaysia’s Net Zero ambitions.

Since its inception in 2021, CIMB’s GreenBizReady proposition has empowered companies to scale their operations and drive impactful environmental change.

iHandal’s patented heat recovery technology, HeatFuse, is designed, manufactured, and commissioned here in this manufacturing facility.

The one-stop sustainability solution provides access to sustainable finance at preferential rates, along with complimentary capacity building and networking opportunities to overcome common challenges.

The impact of such sustainable financing offerings is exemplified by the success stories of FatHopes Energy Sdn Bhd (FatHopes Energy) and iHandal Energy Solutions Sdn Bhd (iHandal), two Malaysian green tech SMEs that CIMB has supported in scaling up their businesses.

Transforming waste into wealth

FatHopes Energy is now at the forefront of the biofuel industry, notably in the aviation sector. FatHopes was founded by Vinesh Sinha.Founded by Penang-born entrepreneur Vinesh Sinha, FatHopes Energy, which operates throughout South-East Asia, has cemented its position at the forefront of the biofuel industry, notably in the aviation sector, as the pioneering collector of used cooking oil (UCO) in the region for the development of sustainable aviation fuel (SAF).

Leveraging technology, FatHopes Energy has the best-in-class enterprise cloud software that digitalises its waste management operations.

The platform’s 24/7 customer self-service web and mobile apps streamline waste management requests, allowing customers to submit requests for collection services directly through the user-friendly app.

The company specialises in collecting a variety of waste-based organic oils, like used cooking oil from various sources across its geographic footprint, including but not limited to large restaurant chains, hotels, factories and individual households.

This aggregated waste oil is then purified and exported in bulk to oil and gas majors around the world as sustainable feedstock for SAF production.

To date, aviation has contributed around 4% to global warming and its share of global emissions is likely to grow as global demand for flying rises in the future.

Countries such as Sweden, Norway and France have mandated SAF usage, which can reduce carbon dioxide (CO2) emissions by up to 80% compared to traditional jet fuel.

Domestically, there is a growing momentum to promote the use of SAF on a commercial scale. In the National Energy Transition Roadmap (NETR), Malaysia has established an SAF blending mandate starting at 1%, which is expected to increase to 47% by 2050.

Recognising the demand for SAF, FatHopes Energy has since scaled up its business to operate 35 refinery depots or assets, and is rapidly expanding across the region.

FatHopes Energy has also onboarded an impressive roster of clients, which include global oil and gas majors, and recently partnered with Dubai-based Lootah Biofuels to supply SAF to airlines flying out of the Dubai International Airport.

CIMB is also exploring scaling up outreach initiatives with FatHopes Energy, such as holding used cooking oil collection drives at CIMB branches, as part of the bank’s broader efforts to help local green tech SMEs expand their network.

Beyond supporting business growth, CIMB’s financial support has enabled FatHopes Energy to expand its “Program Usahawan Hijau” (PUSH), a green entrepreneurship programme designed to create equitable jobs for the underserved, to empower them to build their own sustainable businesses.

Pioneering advancements in energy efficiency

Aaron Patel built iHandal to be a leader in improving energy efficiency in commercial and industrial buildings, offering cost-saving heating and cooling solutions.Founded by local entrepreneur Aaron Patel in 2009, who envisioned being a part of a carbon-neutral Malaysia, iHandal has established itself as a leader in improving the energy efficiency of commercial and industrial buildings, offering various cost-saving heating and cooling solutions.

iHandal’s partners include some of the best hotels across South-East Asia, including EQ Kuala Lumpur and the Ritz Carlton Milllenia, Singapore.

The company is renowned for its patented heat recovery technology, HeatFuse, which is designed, manufactured and commissioned from its factory.

Through an innovative 3C process: capture of wasted heat, compression with HeatFuse and channelling of compressed energy towards other functions, iHandal’s system is able to repurpose energy for various applications such as water heating, process cooling and air conditioning.

iHandal will typically conduct an energy audit to identify the source of wasted energy at no upfront cost.

Its system will then be implemented, saving up to 80% of a user’s thermal energy costs. Once the savings are proven and achieved, users can continue using the system for long-term savings.

To date, iHandal’s clients have saved a total of RM110mil annually, in excess of 300,000 tonnes of CO2.

CIMB’s sustainable financing has enabled iHandal to double the number of its machines from 75 to 150, significantly boosting their operational capacity.

This expansion has led to an impressive increase in their environmental impact, with an additional 92,000 tonnes of CO2 equivalent reduced annually. Based on the greenhouse gas (GHG) emissions calculator by the US Environmental Protection Agency (EPA), this reduction is comparable to taking 20,000 vehicles off the road each year.

Helping SMEs holistically

CIMB’s GreenBizReady offers complimentary training and capacity building to accelerate SMEs’ adoption of sustainable business practices, through industry-led initiatives such as the revamped Cooler Earth Sustainability Series.

These knowledge sharing sessions help SMEs understand their gaps, proposing actionable strategies to improve their sustainability performance.

With the recent launch of CIMB’s ESG Simplified Playbook for SMEs, CIMB has made it more accessible for SMEs to take the first few steps of their sustainability journey.

In addition, CIMB’s sustainability-linked financing (SLF) is another offering under the GreenBizReady programme that provides SMEs with better financing rates. The programme, with a total allocation of RM3bil until 2030, aims to incentivise SMEs to achieve credible GHG emission reduction targets through attractive financing rebates of up to 0.50% per annum, as they secure financing to meet their capital or expansion needs.

Once sustainability performance targets have been agreed on, SMEs input data such as energy and fuel consumption into the Malaysian Green Technology and Climate Change Corporation’s (MGTC) Low Carbon Operating System (LCOS), a simple and user-friendly web-based tool, that helps them measure, manage, and mitigate their carbon emissions.

CIMB’s GreenBizReady won “Best SME Solution – Malaysia” at The Asset Triple A Islamic Finance Awards 2022, in recognition of its role in helping companies advance their sustainability efforts.

Inspiring a sustainable future

The success stories of FatHopes Energy and iHandal reflect the transformative potential of green technology and the crucial role that financial institutions play in enabling this transformation.

As more green technology SMEs follow their lead, the cumulative impact on Malaysia’s green economy will be profound.

Open to all SME clients, CIMB’s GreenBizReady proposition offers customised solutions to their needs, with a focus on working in partnership to empower SMEs to contribute to a greener, more resilient future.