DBS D05 is the first Southeast Asian bank chosen by the People's Bank of China (PBOC) to participate in its Carbon Emission Reduction Facility.
Under the programme, China’s central bank will extend low-cost funding to DBS Bank (China) Limited, which sits on a select panel of financial institutions.
This enables DBS China to offer low-cost loans to fund sustainable development projects in key sectors including clean energy, energy saving, environmental protection and carbon emission reduction technologies, says DBS on Feb 9.
As the world’s largest energy consumer and carbon emitter, China has set ambitious net-zero targets. It aims to peak carbon emissions before 2030 and achieve carbon neutrality before 2060. “Meeting these goals requires significant investment and backing of green projects, as seen by a strong demand for financing,” says DBS.
Through the programme, PBOC will provide financial institutions with funds equal to 60% of a loan's principal at an annual interest rate of 1.75%. It will also guide financial institutions to provide carbon emission reduction loans to enterprises in key areas of decarbonisation.
As of September 2022, loans valued at over RMB400 billion ($78.11 billion) have been made via the policy tool. In January, the PBOC announced an extension of the initiative until the end of 2024. Select local and foreign financial institutions will also be allowed to participate in the programme.
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Ginger Cheng, CEO of DBS Bank (China) Limited, says: “China is a world leader in transition investment, with over US$546 billion ($727.59 billion) — nearly half the global total — deployed to fund low-carbon technologies in 2022. This underscores the country’s strong emphasis on sustainable development, and echoes DBS’s commitment to net-zero carbon emissions by 2050.”
Cheng adds: “We are honoured that DBS is the first Southeast Asian bank chosen to support China’s green transition. Our participation in the central bank’s carbon reduction facility enables us to ramp up direct financing towards lower-carbon activities, which can in turn help to accelerate China’s green transition.”
