CB BureauAs part of its commitment to reaching net zero in its financed emissions by 2050, DBS has announced sectoral targets that are aligned with science-based decarbonisation glidepaths (carbon-emission pathway to the desired target set), documented in its report titled Our Path to Net Zero – Supporting Asia’s Transition to a Low-Carbon Economy.
Nine industry sectors have been covered by decarbonisation and data-coverage targets. Decarbonisation targets have been set for these seven sectors: 1) power, 2) oil & gas (o&g), 3) automotive, 4) aviation, 5) shipping, 6) steel, and 7) real estate. Data-coverage targets have been set for food & agribusiness and chemicals.
The publication of this actionable plan to reach net zero follows the bank’s announcement in October 2021 that it had become a signatory to the Net-Zero Banking Alliance As a signatory, DBS is required to align its lending and investment portfolios with net zero emissions by 2050.
The nine sectors represent the most carbon-intensive institutional banking segments financed by DBS. They represent 31% of the bank’s outstanding loans but constitute the vast majority of the Institutional Banking Group’s financed emissions.
Acknowledging that the path to net zero requires lower usage of fossil fuels, an absolute emissions reduction target has been set for the O&G sector. By 2030, the bank has targeted to reduce the absolute emissions in the O&G sector which are attributable to DBS by 28%. The bank’s O&G target will cover Scope 1, 2 and 3 emissions. This complements the bank’s earlier commitment made in 2019 to progressively phase out thermal coal financing.
In addition, the decarbonisation targets will cover capital-markets activities as well.
In a press release shared with CauseBecause, Piyush Gupta, CEO of DBS Bank, said, ‘Our firm conviction is that our net zero commitment, made last October, must be supported by a clear and detailed roadmap and plan. However, charting a viable course of action that is constructive and impactful is not easy, given challenges in mapping out suitable industry pathways and realistic medium-term milestones in markets with differing starting points. That is why I am pleased that we are able to announce today a set of ambitious, broad and measurable actions that we can execute against. The decarbonisation targets will act as the “north star†for our financing activities guiding us to net zero by 2050 through measurable change.’
Supporting Asia’s transition to a low-carbon economy
DBS’ commitments are ambitious as there is widespread recognition that many emerging markets in which it operates will move to net zero at slower rates than their developed-market counterparts. With the latest announcement, DBS aims to encourage and enable its institutional banking customers to pivot their business strategies and accelerate their transition journeys. This can be achieved in various ways including by providing them with sustainable and transition finance solutions.
Tan Su Shan, Group Head, Institutional Banking Group, said, ‘Our ability to achieve our net zero ambition relies heavily upon the success of our clients in delivering their own transition plans. In the past few years, we have seen a significant increase in the demand for green and sustainable finance solutions. To accelerate the transition and meet the vast investment needs in the next few decades, we will proactively partner our customers, providing them with financial advisory and transition finance solutions, as we collectively work towards a low-carbon future.’
Gupta added, ‘Decarbonisation cannot be achieved in silos – the global banking and business community, and world leaders have a part to play in balancing the climate agenda, social equity and economic development. Collectively, we must exercise leadership by working towards a balanced, sustainable and just transition.’
So as to tackle climate change
DBS has been proactively adopting measures to tackle climate change for several years. The bank has been making steady progress across several areas as part of its broader sustainability efforts.
- Positive ESG impact through sustainable finance
DBS continued to build on its sustainable financing business, growing its sustainable finance portfolio to SGD 52.7 billion as on 30 June 2022, exceeding its SGD 50 billion target well ahead of 2024.
- Towards zero thermal-coal commitment
In April 2019, the bank ceased financing new thermal-coal assets. Since then, it has continued to progressively phase down its thermal coal exposure.
At the same time, the bank continues to ramp up support towards the renewables sector as evidenced by its increased exposure to renewable-energy projects of SGD 5.9 billion in 2021, from SGD 4.2 billion in 2020.
- Net-zero operational carbon emissions by end-2022
DBS is committed to achieving net-zero operational carbon emissions across the bank by end-2022 and continues to reduce the bank’s carbon footprint while advancing its sustainable procurement agenda. As at end-2021, 100% of DBS’ new suppliers have signed their commitment to the bank’s Sustainability Sourcing Principles.
In November 2017, DBS became a signatory to RE100 – the first Asian bank and Singapore company to join the global renewable energy initiative. The bank is committed to using 100% renewable energy for its Singapore operations by 2030.
- Transparent disclosures
In 2019, DBS became the first bank in Singapore and Southeast Asia to adopt the Equator Principles. The Equator Principles is a globally recognised risk-management framework adopted by financial institutions for determining, assessing and managing environment and social risk in infrastructure projects.