Sustainability at the heart of business

GLOBAL economies are furthering their sustainability push in a bid to mitigate the substantial financial, social and environmental risks posed by the deepening climate crisis.

The gravity of the climate emergency can no longer be ignored and being part of the solution to drive change and build a sustainable future is "non-negotiable", says Chng Bee Leng, OCBC's Group Head of Risk Policy.

Chng is expecting sustainable financing and investments to accelerate the climate transition within the region amid rising regulatory pressure and increased demands for climate-related risk disclosures.

"Beyond looking at P&L, you also have to look at a company's ESG (environmental, social and governance) practices and performance," says Chng citing the triple bottom line which places emphasis on a business's success in people, planet, and profit.

Embracing sustainability

While ESG has been a huge buzzword in recent years, adopting sustainable practices does not simply happen overnight.

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For OCBC, it has always been part of its corporate strategy to create positive impact and sustainable value for its customers, employees and the communities that it operates in, according to Chng.

"However, we felt that we needed a strategy to articulate our ambition, purpose, goals and what we want to do in sustainability," says Chng, adding that this strategy cuts across the entire organisation from external stakeholders to employees.

OCBC's sustainability strategy focuses on 5 key pillars: putting customers first, building a sustainable future, acting with integrity, valuing its people and engaging communities.

Chng adds: "We have and will continue to implement core initiatives and priorities aligned to the 5 pillars in order to achieve the OCBC Group's goals. We also measure our performance in the 5 pillars against selected United Nations Sustainable Development Goals, tracking the Group's long-term value creation for stakeholders."

Anchored by OCBC's purpose and values, a robust governance structure lays the foundation of its sustainability strategy. The board drives all aspects of sustainability with the sustainability council being chaired by the Group Chief Executive Officer Helen Wong.

"The governance around sustainability is important. It comes all the way from our board of directors, where they provide that oversight and oversee the strategy of the Bank," says Chng.

OCBC is cognisant of the impacts of climate change and has developed a Climate Strategy. This strategy focuses on 3 priorities: moving towards net-zero emissions in alignment with Paris Agreement goals, expanding sustainable financing and sustainability-themed product portfolio, and growing a bankwide ecosystem of sustainable solutions and partnerships.

In 2019, OCBC became the first bank in Southeast Asia to stop financing new coal-fired power plants. In the following year, OCBC became a signatory to the Equator Principles which guides how it determines, assesses and manages environmental and social risks in projects.

Still, there is much to be done within a limited time, says Chng.

To this end, OCBC has been implementing the Task Force on Climate-related Financial Disclosures (TCFD) recommendations since pledging its support to them in 2019.

The Bank had in October 2021 published an inaugural TCFD report on how it manages its climate risks and opportunities.

OCBC further stepped up its commitment by becoming the first bank in Southeast Asia to adopt the Poseidon Principles in 2021, joining leading global banks in a commitment to track, monitor and drive emissions reduction in its shipping portfolios.

Part of the agenda is also to raise the bar for the organisation and customers to reach for higher standards.

"OCBC has a robust set of policies in place to assess companies' ESG practices. We will not hesitate to walk away from a deal that does not meet the requirements," says Chng.

By the end of last year, OCBC's sustainable finance portfolio grew to over S$34 billion amid efforts to ramp up support for renewable energy projects, sustainability-linked loans and green loans.

It has since doubled its sustainable finance portfolio target for 2025 to S$50 billion after surpassing its original S$25 billion target.

Given that small and medium-sized enterprises (SMEs) play a crucial role in driving a sustainable economy, OCBC's SME Sustainable Finance Framework was launched to make it simpler and less costly for SMEs to access financing of up to S$20 million.

"This is really to help them on their journey. We want to give them access to the capital because it is not easy for them to get such loans without going through a lot of rigour and justification," says Chng.

In addition to its initiatives for large corporates and SMEs, OCBC has also been extending a helping hand to individuals seeking to contribute to the nation's sustainability efforts.

To encourage retail customers to be more sustainability conscious, the Bank launched the EcoCare home and renovation loan and EcoCare car loan package for the purchase of electric vehicles in March last year.

On supporting the transition to a 'greener' world, Chng says: "Financing the decarbonisation transition remains a priority in our client engagement strategy. Through the use of financing instruments including green loans, green bonds and sustainability-linked loans, we have actively supported our client's decarbonisation and sustainability efforts."

"Looking ahead, we will continue to ensure our actions and disclosures put us in good stead for the net-zero era, including measuring, reporting and partnering with our customers in our journey towards decarbonisation."

Beyond its business activities, the Bank has also taken steps to drive sustainability within its operations. It had committed to achieving carbon neutrality for its banking operational emissions in 2022, and had in May this year announced that it will invest more than S$25 million in its operations in Singapore, Malaysia and Greater China to reduce its carbon footprint.

These investments into energy-efficient technology and solar energy systems are expected to cut around 10,000 tonnes of carbon emissions within the next 4 years, or equivalent to removing some 10,000 cars from the road.

Chng points out that while such efforts are important in terms of cutting emissions, a lot of it is also about ingraining attitudes towards sustainability within the organisation.

Separately, some S$30 million will also be poured into sustainability training initiatives. Over 20 training modules on sustainability have been developed with sustainability experts.

These modules cover both key concepts and practical aspects of sustainability for employees to develop a deeper understanding of the issue as well as apply the knowledge in their respective roles.

Beyond the 'E' in ESG

Sustainability is a multi-faceted and far-reaching topic that extends beyond just climate. The social pillar which includes valuing people and engaging communities are equally important.

"Our long-term success is interwoven with the wellbeing of our people and the society. There are several targets that are very important to us, one of which is striving for 42 per cent of our leadership roles to be filled by women in 2022," says Chng.

"Another important goal that we have is that we want to be able to help 1 million of our vulnerable customers in core markets. Giving back to society is an essential part of OCBC's corporate culture," she adds.

By engaging and supporting the communities in the markets in which OCBC operates in, and embedding responsible and sustainable business practices in everything it does, the Bank aspires to do its part to build a sustainable future for all.