The Straits Times: DBS' Net-zero Plan Wins Praise But Faces Challenges

Banks’ financed emissions are a major driver of climate change. Setting tough net-zero emissions, reduction targets and working with clients are vital to drive the green transition.

Oliver Wyman’s Timothy Colyer, Asia Pacific Climate and Sustainability lead, spoke to The Straits Times in response to DBS Bank’s launch of the most comprehensive set of net-zero emission targets in the global banking industry, becoming the first regional bank to set clear targets to cut carbon emissions across a number of major polluting industrial sectors that it lends to. The bank announced a clear road map to reach net-zero financed emissions by 2050, and will use its financial heft to work with its clients to drive them towards low-carbon investments and away from reliance on fossil fuels.

Challenges remain for DBS
Oliver Wyman, which helped DBS with the net-zero target exercise, said banks can struggle to know where to start for some sectors. For example, for some clients and their subsidiaries, there is little or no emissions data because they have never had to report it.

Second, banks need to understand the green transition plans of customers, factoring in government policies, and then assess how much additional financing needs to be directed to low-carbon companies and away from high emitters.

"Achieving net-zero targets requires a more subtle set of actions. The task now is to meaningfully engage with and then finance existing clients to transition. Or transition faster - in our research on companies' decarbonization plans, we frequently find these plans are not ambitious enough," said Mr Colyer.

Read the full article here.