SINGAPORE: Singapore’s DBS Bank has committed to zero thermal coal exposure by 2039, as part of “continued efforts to tackle climate change and work towards a lower carbon future”, it said on Friday (Apr 16).
To achieve this goal, the bank will cease the onboarding of new customers who derive more than 25 per cent of their revenue from thermal coal. This will take effect immediately.
It will also stop financing customers who derive more than 50 per cent of revenue from thermal coal from January 2026, except for their non-thermal coal or renewable energy activities.
These thresholds will be lowered over time, the bank said.
As part of its plans, DBS bank will leverage its framework to achieve “meaningful decarbonisation” in sectors that remain reliant on thermal coal.
“This will be conducted through engagements with customers to establish their transition strategies, and the incorporation of greenhouse gas reduction targets in all applicable sustainability linked loan structures,” said the bank.
It will also disclose its thermal coal exposure annually in its sustainability report.
DBS in 2018 issued a statement to restrict financing to only coal-fired power projects that adopt more advanced technologies which emit lower carbon emissions, and to stop financing new thermal coal mining projects. This was followed by a blanket cease in financing any new coal power assets in April 2019.
At the same time, the bank increased its exposure to renewable energy projects at S$4.2 billion in 2020, up from S$2.85 billion in the preceding year.
Ms Tan Su Shan, group head of institutional banking at DBS Bank, said: “Every year counts in the journey towards a low-carbon future and we recognise the increasing need for transition financing to help industries gradually navigate away from brown to green.
“In turn, renewable energy will increasingly take centre stage as a core component in the world’s transition towards net-zero.
“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.”
DBS recently committed to ensuring net-zero operational carbon emissions across the bank by 2022. It has also committed to using 100 per cent renewable energy for its Singapore operations by 2030.
Last year, the bank increased its operational energy consumption from renewables across its key markets to 21 per cent of the bank’s total energy consumption, up from 14 per cent in 2019.
“In January 2021, DBS raised its sustainable finance target to S$50 billion by 2024, accelerating its sustainability agenda in helping customers incorporate sustainable business practices into their overall business strategy. This reinforces DBS’ efforts in responsible banking which is a key pillar of the bank’s approach to sustainability,” said the bank.