Singapore's United Overseas Bank (UOB) plans to stop financing upstream projects as part of a new target to achieve net zero by 2050.
UOB's energy transition plans encompass six sectors that make up about 60pc of its corporate lending portfolio — power, automotive, oil and gas, real estate, construction and steel.
The bank will no longer finance oil and gas projects approved for development after this year, as part of its net zero strategy. It also aims to reduce emissions intensity in the power sector by 61pc by 2030, and subsequently by 98pc by 2050. UOB aims to reduce emissions intensity in the automotive industry by 58pc by 2030, and reach net zero in this sector by 2050. It similarly aims to reduce emissions in the construction, steel and real estate sectors by 85pc, 92pc and 97pc, respectively, by 2050.
UOB has also committed to exiting financing for the thermal coal sector by 2039, on top of existing bans on financing new greenfield projects or the expansion of coal-fired plants and thermal coal mines.
UOB will also join the Net-Zero Banking Alliance (NZBA), which also includes western banks such as JP Morgan Chase and Bank of America. The bank will conduct annual reporting to track the progress of its net zero commitments, and intends to expand the scope of its targets to include more sectors, it said.
"It is important to balance growth with responsibility on our net zero journey. Our targets are ambitious, yet realistic, and they also meet the global goals of net zero for Asean," said the bank's deputy chairman and chief executive officer Wee Ee Cheong.
The bank is just the latest in a slew of Asian financial institutions that have set environmental targets for financing activities, including fellow Singaporean bank DBS, and Japan's Mitsubishi UFJ and Sumitomo Mitsui Banking. This will likely increase the onus on companies seeking investment to prove the sustainability credentials of their projects, although it may also raise the barrier to investment for smaller firms.
