Ok thanks Bruce. Yes I’m using the 2 inch XPS board as well.

Have never, ever, heard of cement board in a non-bathroom finished space. Basements can benefit from mold-resistant drywall, but only as part of an appropriate system.

If you're expecting a flood, I suppose cement board could make sense. Otherwise, just finish the whole wall in drywall, being sure to keep it a few inches above the floor in case of minor flooding. (Says the guy who spent an invigorating half hour last night sweeping water to the sump pump after a window well filled and flooded in a sudden downfall.)

The problem may not be the board you choose but whatever is concealed behind the board.

I have heard of some people orientating the drywall horizontally in a basement so in case of a flood up to four feet deep they only have to replace the lowest band of drywall.

Residential drywall is hung horizontally. Vertical is typical for commercial.

Ok thanks all. Other than it being unconventional, do you see any other issues that could happen with cement board in the first 3 ft of the wall?

Its a PIA to cut neat receptacle box holes in cement board because the edges fracture as you cut out the holes, but thats a one-time fix.

Bruce