DBS is committed to enabling a just energy transition in Asia and phasing out our thermal coal exposure.
Since 2018, DBS has progressively refined our commitment to tackle climate change. In February that year, we issued a statement to restrict financing to coal-fired power projects utilising more advanced technologies and to stop financing new thermal coal mining projects. We ceased the financing of any new thermal coal mining projects and thermal coal power assets in 2019. We also implemented additional restrictions, as highlighted below, based on which we have been able to consistently and materially reduce our thermal coal exposure in recent years, as disclosed in our Sustainability Reports.
In 2022, we further broadened and accelerated our climate agenda when we published ‘Our Path to Net Zero – Supporting Asia’s Transition to a Low-Carbon Economy. [1] In this report, we described in great detail how we selected scienceinformed decarbonisation pathways, and set 2030 as well as 2050 emissions reduction targets for the seven priority sectors (representing some of the most carbon-intensive sectors in the real economy and collectively accounting for a majority of global GHG emissions), including Power and Oil & Gas sectors.
While we have set clear commitments on the business activities that DBS wants to support, we acknowledge that to best support our clients in accelerating their energy transition, it may be necessary to provide financing for certain high carbon-emitting activities for an eventual transition outcome. Such financing, for example, the early retirement of coal-fired power plants, would increase our financed emissions in the short term but ultimately accelerate the decarbonisation of the real economy. DBS recognises that the energy transition is complex, especially given the Asian context and the imperative to accomplish this in a just manner. Hence, these types of financing will be conducted with reference to regulatory recommendations and industry standards and best practices prevailing at that time.
The area of transition and transition finance is an evolving field and there is currently no global agreement on what a credible transition may look like across sectors and geographies. Paris-aligned pathways to accomplish a “well below 2°C” outcome can be interpreted in a myriad of ways. The Intergovernmental Panel on Climate Change’s (IPCC) Special report: Global warming of 1.5°C2 profiled no fewer than ninety 1.5°C pathways. [2] The multiple pathways underline varying degrees of optimism for largescale deployment of decarbonisation technologies and nature-based solutions as well as socio-cultural and behavioural changes. As such, we will continue to work on updating our transition finance framework and implementing necessary reporting and controls to govern transition finance.
Nevertheless, neither the lack of an alignment regarding sectoral, geographical pathways nor the imprecision of climate data is a justifiable reason for inaction. We are committed to our broader 2030 and 2050 decarbonisation targets as well as to zero thermal coal exposure (encompassing loans to mining and power generation) latest by 2039. This timeline has been determined considering the final maturity of our existing long-tenor thermal coal exposure grandfathered from previous financing commitments, which would have run off by then.
We intend to reach this goal in the following ways: 1. We will cease onboarding[3] new customers who derive more than 25% of their revenue from thermal coal. The threshold will be lowered as time progresses;2. From January 2026, we will stop financing existing customers who derive more than 50% of revenue from thermal coal, except for their non-thermal coal or renewable energy activities. These will be reflected in legally binding documentation. We will stop general purpose financing which can be fungible. The threshold will be lowered as time progresses; 3. In addition to our internal sustainable and transition finance frameworks, we will also leverage other relevant regional and market taxonomies, such as the Singapore-Asia Taxonomy and the ASEAN Taxonomy 2.0 amongst others, to achieve meaningful decarbonisation in sectors which 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 target in all applicable sustainability linked loan structures; and 4. We will disclose our thermal coal exposure annually in our Sustainability Report.
[1] https://www.dbs.com.sg/corporate/sustainability/our-path-to-net-zero
[2] Rocky Mountain Institute, Charting the Course to Climate-Aligned Finance: Five Barriers to Alignment and How a Sectoral Approach can Help, March 2020.
[3] Onboarding is defined as any new financing to a non-borrowing entity.
Asia’s Safest Bank, 2009 – 2024, Global Finance
Best Bank in the World 2022, Global Finance
World's Best Bank 2021, Euromoney
Best Bank in the World 2020, Global Finance
World's Best Bank 2019, Euromoney
Global Bank of the Year 2018, The Banker
