DBS Bank has raised its 2024 sustainable finance target to S$50 billion (US$37.5 billion) from S$20 billion, accelerating its sustainability agenda in helping customers incorporate sustainable business practices into their overall business strategy.
The new commitment reinforces DBS’ efforts in responsible banking, which is a key pillar of the bank’s approach to sustainability. It also stems from more companies seeking to advance their corporate sustainability agenda through sustainable financing, especially as the Covid-19 pandemic puts sustainability in the spotlight.
Tan Su Shan, group head of institutional banking, DBS, says that this “never normal” world has become an opportunity for companies to see how they can tackle an expanding range of environmental, social and governance (ESG) challenges, as well as integrate the social and sustainability agenda into their corporate strategy and business practices.
“We thought our earlier target of S$20 billion for renewable and other green financing would be a stretch and were greatly heartened at the level of customer interest in moving from business-as-usual mode to adopting sustainability in their strategies,” Tan adds. “Since Covid-19 hit, many companies have actually doubled down on their ESG commitments, and we saw a marked increase in the number of corporate interests in sustainable financing.”
DBS continues to see a good mix of sustainable financing deals across the markets and sectors in which it operates. The green loan market continues to be dominated by borrowers in the real estate sector, but the bank is now involved in others, such as financing renewable energy equipment-makers and electric vehicle battery plants.
To encourage more companies from key industries to transition to a low-carbon economy, DBS is the first Singapore bank to offer transition financing to companies that want to take incremental steps towards reducing carbon footprint. It is the first commercial bank to publish a Sustainable and Transition Finance Framework and Taxonomy, which serves as a reference to guide clients to adapt and build resilience in the face of climate change and resource scarcity, and address critical global issues, such as income inequality.
Increasingly, stakeholders also want to understand and measure the value companies create beyond profits, and ESG considerations are very much at the forefront now, Tan points out. “To remain relevant, companies will need to balance profits with meeting the needs of society.”
Since 2018, DBS has concluded over 100 sustainable financing deals worth about S$17 billion. For full-year 2020, the bank ranked first in Bloomberg’s Global and APAC League Tables for green loan principles loans and its APAC (ex Japan) League Table for green use of proceeds loans for its role as mandated lead arranger.
In capital markets, landmark sustainable and green financing transactions done by DBS in 2020 include the US$1.11 billion dual-tranche green project bond by Star Energy Geothermal, PSA Marine’s three-year €30 million-equivalent sustainability-linked loan and the €500 million Korea Housing Finance Corporation Covid-19 social bond.