But in its new net zero blueprint, covering nine key industrial sectors, DBS acknowledges it is ’neither realistic nor desirable’ to abruptly cut off fossil fuel supply without offering commercially-viable alternatives, while demand remains high.
The banking corporation – which itself is committed to achieving net zero operational carbon emissions by the end of 2022 – is targeting 38.6 MtCO2e in 2020, 27.7 MtCO2e in 2030 and a significant cut to 3 MtCO2e by 2050 in the oil and gas (O&G) sector.
To achieve its targets, DBS – which became a signatory of the Net-Zero Banking Alliance last October – will support clients to meet their transition targets by financing their decarbonisation efforts; reduce exposure, especially to high-emitting parts of the O&G value chain; and direct financing to companies that are diversifying away from pure O&G production.
Lim Wee Seng, Group Head of Energy, Renewables and Infrastructure, said DBS is signalling a clear intent to support the pathway to a net zero economy for Asian economies, and beyond, underpinned by its lending targets for the O&G sector.
”In line with our net zero commitment, our decarbonisation targets for 2030 and 2050 for the O&G sector are not to produce the same O&G products with lower emissions but to produce fewer O&G products in total,” DBS states.
”Therefore, we expect the transition in other sectors to reduce demand gradually but significantly for O&G products over time.”
DBS said it will work with companies driving the transition by investing in low-carbon energy sources and associated infrastructure.
In April 2019, the bank ceased financing new thermal coal assets. Since then, it has continued to progressively phase down its thermal coal exposure.
At the same time, the bank continues to ramp up support towards the renewables sector as evidenced by its increased exposure to renewable energy projects of SG$5.9bn in 2021, from SG$4.2bn in 2020.
Despite decarbonisation becoming a ‘risk management imperative’, the bank says it is a business opportunity. Investment will amount to $3.5trn annually, according to the Intergovernmental Panel on Climate Change (IPCC) in 2021, though some reports put it nearer to $5trn a year.
DBS is present in 18 markets globally, including six core markets in Asia, namely Singapore, Hong Kong, China, India, Indonesia and Taiwan.
In June, Temasek announced the launch of GenZero, a wholly-owned investment platform company dedicated to accelerating decarbonisation globally, focusing primarily on technology- and nature-based solutions, and carbon ecosystem enablers.