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OCBC embarks on decarbonisation pledge in six sectors, including oil and gas

For the power sector, OCBC's target is to cut emissions by 55 per cent by 2030. PHOTO: ST FILE

SINGAPORE - Singapore-listed lender OCBC on Tuesday pledged to embark on decarbonisation targets in six carbon-intensive sectors, in a move that will have it join the other two local banks in their net-zero quests.

The six sectors that the bank finances that emit the most greenhouse gas are: power, oil and gas, real estate, steel, aviation, and shipping.

They make up 42 per cent of OCBC’s corporate and commercial banking loan portfolio.

In a bold move, OCBC would not extend project financing to upstream oil and gas projects that obtained approval for development after 2021. This is on top of target to reduce absolute emissions from its portfolio by 35 per cent by 2030 and by 95 per cent by 2050, it said in its report titled Partnering Clients towards a Net Zero Asean and Greater China.

Singapore, known as the oil hub of Asia, is trying to switch from black gold to green energy as it seeks to become carbon-neutral by 2050, in line with global standards.

The country was ranked the world’s sixth-biggest exporter of refined petroleum in 2021, based on data from the Observatory of Economic Complexity.

OCBC aims to achieve 0 per cent emissions by 2030 for real estate, which is the single biggest sector of the six in its portfolio, as well as for shipping.

For the power sector, the bank’s target is to cut emissions by 55 per cent by 2030, and 100 per cent by 2040. This sector accounts for 40 per cent of greenhouse gas emissions globally.

In aviation, the goal is to lower emissions by 66 per cent by 2030 and 100 per cent by 2050.

The 2030 target for steel is to lower by 13 per cent and to hit a 94 per cent reduction by 2050.

The group’s chief executive Helen Wong said the targets are “ambitious, quantitative and grounded in science”.

“We will partner our corporate clients to meaningfully contribute to a net-zero Asean and Greater China by 2050 in an orderly and just transition.”

The bank said the targets will be reviewed at least once every five years, as climate science evolves and more data from clients become available.

To help customers decarbonise more quickly, the lender will develop financing solutions for corporate clients to finance their green and transition business activities.

It will also tap innovative technology solutions to quicken decarbonisation.

As part of efforts to help clients develop and invest in greener assets, the bank has offered bespoke sustainable financing such as the OCBC 1.5°C loan that was rolled out in March this year.

As at end-March, the bank’s sustainable finance portfolio was $47 billion, near its 2025 goal of $50 billion.

OCBC’s net-zero targets follow DBS’ pledge in September last year and UOB’s in October.

More than 100 banks in the world that make up more than 40 per cent of the global banking assets worth about US$65 trillion (S$91 trillion) had made the promise to align their lending and investment portfolios with net-zero emissions by 2050 under the Net-Zero Banking Alliance. But many still have yet to set a clear timeline on how to achieve the goal.