Singapore bank DBS to end coal financing by 2039

Singapore-based DBS bank has pledged to phase out its thermal coal exposure by 2039, making it the first bank in the country to set a deadline to cease coal financing.

DBS, Singapore's largest bank, announced on 16 April that it will cease taking any new customers that derive more than a quarter of their revenue from thermal coal, with immediate effect.

The bank will also stop financing clients that derive more than half of their revenue from thermal coal from January 2026 onwards, except for their non-thermal or renewable energy activities.

Both thresholds will be reduced with time.

DBS said it is committed to simultaneously working with its customers to incorporate greenhouse-gas reduction targets in all applicable sustainability-linked loan structures. It will also disclose its thermal coal exposure in its annual sustainability report.

DBS' institutional banking group's exposure to thermal coal mining and coal-fired power plants was S$1.48bn ($1.11bn) and S$1.38bn respectively at the end of last year, representing just 0.29pc and 0.27pc of its total exposure, according to its 2020 Sustainability Report. Its exposure to renewable projects increased to 0.84pc of the group's total exposure in 2020 compared with 0.62pc in 2019 and 0.09pc in 2016.

The move comes at a time when lending institutions are facing increasing pressure to divest from fossil fuels amid growing concerns about climate change.

DBS has already been refining its coal commitments in the past few years. The bank first decided to restrict financing to only coal-fired power projects with technologies to reduce carbon emissions and stop financing new thermal coal mining projects in 2018, before moving to cease all financing for new coal power assets in April 2019.

Major banks in Asia-Pacific started making formal commitments to phasing out coal projects from their portfolio. Japan's Sumitomo Mitsui Banking and Mizuho Bank withdrew from domestic and overseas coal-fired power development projects as of May and June 2019, respectively, while Malaysia's CIMB became the first southeast Asian bank to commit to a coal-exit strategy with a deadline in December.

Shareholders of global Bank HSBC will decide at their annual general meeting on 28 May whether to commit to phasing out financing of all coal operations by 2040.

By Subethira Ahrumugam