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Responsible Financing

ABS Guidelines on Responsible Financing Our Approach to Palm Oil Sector

We recognise that our lending practices play an influential role in shaping the behaviours of our customers towards sustainable development and are committed to supporting and implementing responsible financing. The DBS Responsible Financing Standard sets out our overarching approach to responsible financing and provides more structured and detailed guidance to identify and assess potential environmental, social and governance (ESG) risks as part of the credit evaluation process.

Our ESG risk assessment approach is centred on the need to ensure that material ESG issues are considered for all new lending relationships, new credit applications and periodic reviews, as outlined below:

  • Where appropriate, specific sector guidelines or approach for ESG-sensitive industries are established to provide further guidance on ESG risks unique to that industry. These are established taking into consideration our strategy and level of exposure to a sector and presently cover eight sectors namely agriculture, chemicals, energy, infrastructure, mining and metals, waste management, forestry and defence. We are guided by sectoral standards, principles or guidelines and industry best practices when developing these guidelines.
  • The ESG risk assessment is designed to allow an overall understanding of the customer’s approach to managing the ESG issues associated with their business activities (including commitment, capacity and track record) and benchmarks it against the relevant industry standards. Where we identify potential issues as part of our ESG risk assessment or where a customer is in ESG-sensitive industries, additional due diligence would be required. The additional due diligence may entail customer engagement, site visits, review of documentation and where necessary, independent reviews or certification requirements. Depending on outcomes of the due diligence, additional escalation, which may include requirements for additional levels of review by relevant industry specialists, and approvals may be required.
  • If any customer is suspected to be, or there are credible allegations that it is, involved in undesirable ESG practices, we will promptly engage the customer concerned. If the customer is not willing to take steps to adequately manage and mitigate the identified ESG risks, we are prepared to turn down the transaction or reassess the banking relationship.

The DBS Responsible Financing Standard, which includes general ESG guidance for all sectors and the relevant sector guidelines for ESG-sensitive industries, is subject to regular review. We recognise that responsible financing is a journey and intend to review and enhance our standards over time to create positive outcomes for our customers and stakeholders.

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