Securing a sustainable future

AT DBS, we recognise there are many environmental challenges in front of us, but we have chosen to prioritise action on climate change as the most immediate issue, given the urgency and how it is intrinsically linked to other environmental and social concerns.

And while we are clearly not yet on track to achieving the goals of the Paris Agreement, there has definitely been a promising acceleration of efforts.

As at end 2021, 92 countries covering 78 per cent of global greenhouse gas (GHG) emissions had net-zero pledges in place and close to 2,200 companies globally had announced net zero pledges accompanied with science-based targets.

Climate commitments are also fast gaining ground in Asia, with more countries coming forth to make more aggressive climate pledges. For example, China has announced plans to peak its carbon emissions by 2030 and become carbon-neutral by 2060, while South Korea and Japan have pledged to achieve net zero by 2050.

In Singapore, the nation has been a frontrunner not only in terms of its net-zero commitment, but also in its guidance on how to get there as highlighted in its ambitious Green Plan 2030 targets.

But it is crucial to translate all these pledges into action, at pace and at scale. According to a recent report by the Intergovernmental Panel on Climate Change (IPCC), the average annual GHG emissions during 2010-2019 were higher than in any previous decade. And Climate Action Tracker, which assesses all global pledges and decarbonisation targets, reported that we are still likely heading towards a mean end of century warming of 2.1 degrees Celsius.

As a purpose-driven bank, we want to support global efforts to tackle this challenge. In October 2021, DBS became the first Singaporean bank, and among the first 100 banks globally, to sign up to the UN-convened Net-Zero Banking Alliance (NZBA), committing to align our lending and financing portfolios with net-zero emissions by 2050.

And very importantly, we are committed on translating this pledge into real action to be “The Best Bank for a Better World”. What this means in practice is that we take operationalising this pledge seriously across all levels in the bank, from the Board level down to our employees.

In the second half of 2022, we will also publish a white paper that will articulate the methodologies we used to select science-based pathways as well as our interim 2030 decarbonisation targets for nine carbon intensive sectors, as part of our climate roadmap to align our lending portfolio with net zero by 2050.

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SMEs spurring Singapore’s green transition

The importance of transition finance

We apply several levers to accomplish our overarching net-zero goal, one of which being our sustainable finance product suite.

In 2021, we committed S$12.4 billion of sustainability-linked loans and S$6.9 billion of green loans. This brings us to S$39.4 billion in committed sustainable financing transactions to date, moving us closer to our sustainable financing target of S$50 billion by 2024. 2021 was also the second consecutive year that we topped the Asia Pacific (ex-Japan) league table for arranging green and sustainability-linked loans.

But sustainable finance has so far mostly been focussed on “green” business and activities such as renewables. If we want to secure a healthy planet, it will be an imperative to also support “brown” business and activities such as the production of steel and cement, or transportation to become less brown, and ultimately green. This is at the core of transition finance.

But environmental and social challenges are tightly intertwined in a knot. It will be very difficult to accomplish social justice without a healthy planet, as combatting climate change will likely affect some segments of society more than others. For instance, if a developing market accelerates the phasing out of coal to achieve net-zero targets, there needs to be support for families that are dependent on coal mining for income, to transition to other forms of livelihood.

Bringing everyone along

Large companies often lead the way in transitioning towards more sustainable business models, as they have a deeper pool of resources. But to truly achieve a sustainable future, getting small and medium-sized enterprises (SMEs) on board is of paramount importance.

SMEs comprise more than 96 per cent of businesses driving the lifeblood of Asia’s economies. And they are increasingly facing pressure to turn “greener” as their supply chain ecosystem often includes large corporates that may have adopted, or are themselves increasingly compelled to adopt international ESG standards.

We are very committed to helping SMEs in their sustainability journeys, and have been doing so by leveraging technology for several years. For instance, we have developed digital trade financing solutions that enable SMEs to get access to quicker financing to fund their business and sustainability ambitions, by unlocking the power of technologies such as blockchain to track ESG metrics and credit quality.

Within the bank, we also seek to integrate ESG into everything we do. To further nurture our 33,000 strong workforce, we are setting up a DBS sustainability learning campus with an enhanced sustainability curriculum to ensure our talent stay apprised with the latest sustainability developments.

DBS also provides inclusive banking to those who might otherwise not be able to access the formal financial system, advocate for and nurture small businesses that create social impact, and support community causes such as those that champion education, the environment and the elderly.

We also seek to empower businesses to spark positive change through the DBS Foundation, which was established in 2014 to champion social entrepreneurship. In 2021, the Foundation disbursed S$13.4 million in loans at preferential rates to social enterprises and awarded close to S$3 million to 19 social enterprises in Asia via its flagship grant programme.

By bringing everyone on board, I am hopeful of a brighter, greener future ahead as we tackle climate and social challenges in unity.

The writer is Chief Sustainability Officer, DBS Bank