DBS thermal coal exposure is 33% lower since 2021—5 of 7 decarbonisation targets on track for progress

SINGAPORE: DBS thermal coal exposure is 33% lower since 2021, marking a significant achievement towards its goal of achieving zero thermal coal exposure by 2039.

By the end of 2023, the bank’s exposure to thermal coal had fallen to S$1.8 billion from S$2.7 billion in 2021, The Edge Singapore reports.

The bank is making headway in meeting its decarbonisation targets, with five out of seven sectors on track for progress, as highlighted in its 2023 sustainability report released on March 6.

However, challenges persist in the steel and shipping sectors, which DBS identifies as “hard-to-abate.” Addressing these sectors effectively will require collaborative efforts from both public and private entities.

DBS has ramped up its sustainable financing commitments, which stood at approximately S$70 billion as of Dec 31, 2023, up from S$51 billion the previous year.

Helge Muenkel, DBS’s chief sustainability officer, emphasised, “It’s not just the absolute amount of lending, but the relative size in terms of our total book. So, if you put it differently, we’re greening our book more and more.”

On March 5, Mr Muenkel highlighted DBS’s facilitation of close to S$18 billion of ESG bond issuances in the previous year, albeit a decrease of around S$12 billion from 2022 due to subdued capital markets.

Most of these issuances comprised green and sustainable bonds, with notable examples including a green bond by China Power International Limited and a Singapore dollar-denominated green bond by CapitaLand Integrated Commercial Trust.

DBS’s commitment to phasing out thermal coal from its portfolio by 2039 is underscored by its updated coal policy.

Lim Wee Seng, group head of energy, renewables, and infrastructure at DBS, clarified, “It’s certainly not that I want to do coal until 2039; it’s [because] what I’ve committed to will only run out by 2039.”

The bank has updated its coal policy to align with regional taxonomies for coal phase-out, driven by two key developments last year.

Firstly, the Asean Taxonomy Board’s announcement in Mar 2023 allowed projects transitioning away from coal to access financing—a first in regional taxonomies.

Secondly, the Monetary Authority of Singapore launched the Singapore-Asia Taxonomy for Sustainable Finance at COP28 in Dec 2023.

Despite progress in various sectors, DBS acknowledges the challenges in decarbonising steel and shipping. While improvements have been observed, emissions intensity within the steel portfolio remains marginally above the reference scenario.

DBS aims to drive reductions by financing more efficient technologies and exploring alternative solutions such as carbon capture and storage.

In the shipping sector, DBS faces hurdles in meeting its decarbonisation targets, primarily due to existing commitments predating the establishment of sectoral targets.

Nonetheless, the bank remains committed to engaging clients in adopting lower-carbon technologies and directing financing towards more efficient vessels. /TISG

Read also: DBS CEO Piyush Gupta’s salary down 27% at S$11.2M after pay cut