As part of DBS’ efforts to partner clients from key industries to transition to a low-carbon economy, DBS today published a Sustainable and Transition Finance Framework and Taxonomy.
The world’s first Sustainable and Transition Finance Framework and Taxonomy by a bank will form the bedrock for DBS to engage with clients who are furthering their sustainability agenda. The taxonomy will serve as a reference to guide clients to adapt and build resilience in the face of climate change, resource scarcity and address critical global issues such as social inequality.
To encourage greater transparency in sustainable and transition economic activities, the taxonomy outlines the way DBS manages transactions that are classified as “Green”, “Transition” and/or contributing to the United Nations Sustainable Development Goals (UN SDGs)[1]. It also summarises a broad list of eligible economic activities – be it the use of recycled plastics for apparel making, or an electricity grid upgrade to enable integration of intermittent renewable energy.
Tan Su Shan, Group Head of Institutional Banking, said that the introduction of this framework reinforces the bank’s efforts to advance sustainable development by facilitating the categorisation, monitoring and reporting of sustainable financing not just in DBS but in the banking industry.
“As a purpose-driven bank, we are constantly looking for ways that our business can leave a positive impact. This framework is an extension of that commitment, with a comprehensive approach that can be summed up in three ‘T’s – Transition, Transactions and Transparency. While pursuing our own sustainability goals, we want to encourage companies to transition towards more carbon efficient operations by considering commercially viable greener alternatives. The second ‘T’ is for the sustainable finance transactions we have completed. We have a track record of almost 100 deals worth SGD12 billion that were closed and mandated over the last two-and-a-half years. The third ‘T’ is for the emphasis on transparency. We welcome a constructive debate on ways to achieve sustainable development while creating value for all.”
DBS – first Singapore bank to offer Transition Financing
With the launch of the taxonomy, DBS will also be the first Singapore bank to offer Transition Financing. DBS will take a prudent, scientific approach to evaluate the transitional qualities of the economic activities and whether clients have a strategy to adapt their businesses to arrive at the ambition of the Paris Agreement[2].
Yulanda Chung, Head of Sustainability, Institutional Banking Group, said that addressing transition financing is important as achieving climate goals require a significant reduction of carbon emissions. “In many sectors, clients are realising that decarbonising solutions are at a nascent stage of growth. As a result, solutions may not yet be available at scale due to cost and technological barriers.”
“There are many interpretations of what constitutes transition finance. The bottom line is we cannot afford to dismiss clients who carry out activities which are less than dark-green but are nonetheless part of the mainstream economy instrumental to getting us below 1.5-degree temperature increase. Every transitional step towards reducing carbon footprint will make a significant, cumulative difference over time.”
The implementation of the framework will involve robust governance and reporting processes that enable transparency. The framework has also received a second party opinion from CICERO Green[3]which has opined on the taxonomy and provided a broad, qualitative review of the climate and environmental risks and ambitions.
For further information, please visit DBS Sustainability.
[1] The World Economic Forum estimates that there is a USD2.5 trillion annual financing gap that stands in the way of the international community achieving its Sustainable Development Goals.
[2] The central aim of The Paris Agreement is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.
[3] CICERO Shades of Green is an independent research-based organisation that provides independent environmental assessments of green and sustainability bond frameworks and the issuer’s relevant internal governance procedures.
About DBS
DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank’s “AA-” and “Aa1” credit ratings are among the highest in the world.
Recognised for its global leadership, DBS has been named “World’s Best Bank” by Euromoney, “Global Bank of the Year” by The Banker and “Best Bank in the World” by Global Finance. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for 11 consecutive years from 2009 to 2019.
DBS provides a full range of services in consumer, SME and corporate banking. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. DBS is committed to building lasting relationships with customers, and positively impacting communities through supporting social enterprises, as it banks the Asian way. It has also established a SGD 50 million foundation to strengthen its corporate social responsibility efforts in Singapore and across Asia.
With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. The bank acknowledges the passion, commitment and can-do spirit in all our 28,000 staff, representing over 40 nationalities. For more information, please visit www.dbs.com.
