RHB Bank leveraging on ESG to enhance institutional Shariah deposits

RHB Bank’s ESG Deposits initiative, where idle funds are directed towards sustainable socio-economic activities, has provided a bespoke solution for government-linked firm Malaysia Rail Link (MRL) to optimize beneficial gains from its Green Sukuk proceeds.

The 360⁰ ESG Finance Ecosystem by RHB temporarily channels MRL’s bank-deposited funds toward financing of verifiable climate and socio-economic projects – before flowing back to cover the cost of MRL implementing the 665km East Coast Rail Link on the Malayan peninsula.

This optimization ensures private institutions can better manage surplus funds while contributing, within a transparent circular sustainable financial model, to support broader climate goals that include renewable energy, clean transportation and low-carbon infrastructure.

“With ESG Deposits, we are embedding sustainability into the core of banking, ensuring that financial flows actively support climate resilience and inclusive economic growth,” said RHB Chairman Ahmad Badri Mohd Zahir.

Funds from RHB ESG Deposits will support a wide range of eligible activities including solar farms, electric vehicle infrastructure, low-carbon buildings, inclusive healthcare and other socio-economic initiatives aligned with Malaysia’s net-zero ambitions by 2050.

All these financing activities are guided by RHB’s ESG Business Activity Guidelines, Bank Negara Malaysia’s Climate Change and Principle-based Taxonomy and the ASEAN Taxonomy for Sustainable Finance.

Explaining the rationale for this funding initiative, Ahmad Badri said companies with strong ESG practices are often considered to be better managed and more resilient in the long term, potentially reducing investment risk.

“RHB will disclose in our annual reports outlining how the deposited funds have been allocated. This transparency allows customers to track the positive outcomes of their deposit.”

The internal roadmap for RHB Bank aims to support sustainable development by mobilising RM90 billion (US$21.43 billion) in associated financial services by 2027 to empower 2.5 million targeted individuals and businesses across the ASEAN region. The bank has mobilised RM42 billion for this purpose in 2024.