Singapore banks caught in grey area as regional financial sector moves to OK coal phase-out

SOUTH-EAST Asia’s financial sector looks set to give the green light for the financing of early coal phase-out projects. But the ability of Singapore’s three banks to pursue such deals lies in a grey area due to their self-imposed coal policies.

DBS , OCBC and UOB had publicly committed to cease funding for coal-fired power plants in 2019, amid growing international pressure on banks to help curb global warming by cutting financing for fossil fuels. The industry’s approach towards coal has softened somewhat since then, with regional regulators and industry standard-setters now making accommodations for coal phase-out – the early retirement of existing coal power plants.

The Asean Taxonomy – the Association of Southeast Asian Nations’ classification system that defines which activities qualify for sustainable financing – added coal phase-out to its list of eligible activities in March. The Monetary Authority of Singapore (MAS) said last week that it will delay the roll-out of the country’s taxonomy in order to consult on the inclusion of coal phase-out. The Asia-Pacific chapter of the Glasgow Financial Alliance for Net Zero (GFANZ) has said that it is looking into allowing coal phase-out, and its announcement is expected imminently.