DBS Bank will limit transactions with customers who derive a significant portion of their revenue from thermal coal, in a move to tackle climate change and work towards lower carbon emissions.
The bank announced on April 16 that it is targeting zero thermal coal exposure by 2039, making it the first bank in Singapore to commit to phasing out thermal coal.
To achieve the target, the bank will cease onboarding new customers who derive more than 25% of their revenue from thermal coal with immediate effect.
It will also stop financing customers who derive more than 50% of revenue from thermal coal from January 2026, except for their non-thermal coal or renewable energy activities.
The bank will lower the threshold for both measures as time progresses.
In addition, DBS will leverage on its Sustainable and Transition Finance Framework to achieve “meaningful” decarbonisation in sectors that remain reliant on thermal coal, via engagements with customers to establish their transition strategies, and the incorporation of greenhouse gas reduction targets in all applicable sustainability linked loan structures.
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The bank will disclose its thermal coal exposure annually in its sustainability report.
Tan Su Shan, group head of institutional banking at DBS, says the bank recognises the need for transition financing to help industries make the move towards net zero emissions and renewable energy.
“To spur the development of renewables, we have upped the ante on financing projects by leading energy players in the region with the aim to scale the reach and supply of renewable energy in the near future. I believe that our commitments will result in substantial impact in the years to come,” he says.
DBS’ zero thermal coal exposure target is the latest in its sustainability efforts, which include a goal to hit net zero operational carbon emissions across the bank by 2022, a sustainable finance target of $50 billion by 2024, and the adoption of the Equator Principles risk management framework to assess environment and social risk in development projects.
Meanwhile, OCBC Bank says it will continue to take steps to reduce its exposure to coal.
"In 2019, we were the first bank in Southeast Asia to make the commitment to stop financing new coal fired power plants. We deepened our commitment in September 2020 when we undertook not to finance any new thermal coal mines. With these prohibitions in place, OCBC will not add any new coal fired power plants and thermal coal mines to its portfolio," says Chng Bee Leng, head, group risk policy, group risk management at OCBC.
As at 9.50am, shares in DBS are down 3 cents or 0.1% lower at $28.92.
