Forging ahead: A DBS branch in Singapore. The bank has engaged over 1,000 SMEs through sustainability training courses and programmes, and concedes that there will be challenges along the way. — Bloomberg
SINGAPORE: DBS Bank is making strides in its green efforts, with sustainable financing commitments reaching about S$70bil (US$52.1bil) as at the end of 2023, but more needs to be done, it says.
Chief sustainability officer, Helge Muenkel, said that the sustainable financing commitments, net of repayments, are an increase from S$51bil in 2022.
He added that the relative share of sustainable lending in the bank’s total book has also grown.
DBS also facilitated close to S$18bil of environmental, social and governance bond issuances.
The bank has started materially phasing out its commitments in thermal coal power plants, said Muenkel. The bank announced it will phase out thermal coal exposure by 2039, making it the first Singapore bank to cease financing in this area.
It has progressively reduced its thermal coal exposure to S$1.8bil, down 19% compared with 2022, and down 33% compared with 2021.
Renewables financing also makes up about half of the bank’s power portfolio now, it added.
Lim Wee Seng, DBS Group head of energy, renewables and infrastructure, said the bank has legacy loans it committed to before it decided to stop financing coal-fired power plants. The last of such loans runs out by 2039.
Muenkel added: “We are committed to phasing out thermal coal activities, but, just phasing out is not good enough.
“We need to do more. We need to look into how we can shut down at least a significant portion of the 5,000 coal power plants early, before the end of the operating time.”
He noted that the challenge is that this is a voluntary effort, rather than being government-mandated.
“It is really complex. Even if you structure an early shutdown, how do you replace it so that local communities have access to energy?
“How do you take care of people who are losing their jobs?” he added, noting that DBS is part of a coalition with the Monetary Authority of Singapore that brings together ecosystem players to look into early phasing out of these power plants.
“If we don’t do anything, there’s no chance of reaching the 1.5 degrees Celsius threshold,” he said, referring to the globally agreed target to limit global warming to within 1.5 degrees Celsius above pre-industrial levels.
DBS has also engaged over 1,000 small and medium enterprises (SMEs) through sustainability training courses and programmes.
“It’s not only about financing with SMEs, but a lot about capacity-building. It’s a lot about supporting education and training. It’s also about data. So it’s actually a very comprehensive approach,” Muenkel said.
He brought up the example of DBS partnering fashion retailer H&M to provide SMEs down the supply chain with technical help so they can use more energy-efficient equipment, or even turn to renewables.
He added that the bank has set its targets and is on a journey to achieve them.
“The reality is it’s not going to be a straight line. It’s not going to be easy. There will be challenges. There could potentially be steps back where sometimes we are in a situation where emissions intensity goes up,” he said, citing the example of a scenario where the bank’s finance activities are considered “amber” rather than “green” but could become “green” given the right efforts. — The Straits Times/ANN
