DBS Hong Kong pledges sustainable finance to build a low-carbon future
- As a purpose-driven bank, DBS Hong Kong is committed to accelerating advancement towards a more sustainable future with green financing
- The bank adopts a three-pillar approach for sustainability that is guided by Responsible Banking, Responsible Business Practices, and Creating social impact
- To advocate closing the loop on food waste, DBS Hong Kong works with partners to launch The Loop at One Island East urban farm
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Asia’s leading banks are reaffirming their commitment to sustainability and the vital role that the banking sector plays in contributing to carbon reduction targets and building a more resilient community. Some have gone the extra mile by guiding capital to a low-carbon economy and championing social enterprises.
One such player is DBS Hong Kong, which continues to bring sustainability to the fore by clustering its initiatives into the three pillars of sustainability: Responsible Banking, Responsible Business Practices and Creating Social Impact. In doing so, the bank offers businesses and organisations access to sustainable financing and guidance on embedding sustainability into their operations, ultimately resulting in more positive impacts on the community at large.
“As a purpose-driven bank, DBS has a long-term vision of being the best bank for a better world. With our sustainability goals closely aligned with those of the United Nations Sustainable Development Goals (UN SDGs), we have taken decisive actions to help clients advance on their sustainability agenda, manage our business in a balanced and responsible way, and create longer-term value for the communities we serve,” says Sebastian Paredes, CEO of DBS Hong Kong.
Responsible banking
Sustainable finance is a key enabler for businesses transitioning to a sustainable future and adopting green solutions. That’s why the bank has raised its sustainable financing target to SG$50 billion (HK$289 billion) by 2024 to help accelerate the progress towards sustainability.
To guide clients to adapt and build resilience to the impacts of climate change, address resource scarcity and other critical global issues such as social inequality, the bank has established a 'Sustainable and Transition Finance Framework and Taxonomy' to help companies chart their sustainability journeys. The first of its kind in the world ever compiled by a bank, the taxonomy classifies transactions and clearly sets out activities that are eligible for green financing.
In 2020, DBS closed SG$9.6 billion (HK$56 billion) in sustainable financing transactions. In Hong Kong, HK$36 billion worth of sustainability-linked financing, bonds and swaps in Hong Kong have been concluded since 2020.
Financing a green landscape with a science-based approach
To be eligible for green financing, the business or project must meet pre-defined sustainable metrics or targets, such as internationally or locally recognised green building certification for the real estate sector or more energy-efficient vehicle designs for the automotive industry.
The project or business being financed may also be subject to independent evaluation against the transition requirements.
For a property development project or business to be eligible for green financing, the borrower is required to pledge that specific green building standards will be met, such as LEED Gold or above, WELL or BEAM Gold or above. Such requirements are clearly set out in DBS’ Sustainable and Transition Finance Framework and Taxonomy.
Noteworthy deals closed last year include Hong Kong’s first-ever interest rate swap linked to UN SDGs with New World Development (NWD), which is structured to hedge against interest rate risk related to a 5-year sustainability-linked loan NWD secured from the bank in 2019.
This year, DBS Hong Kong has also committed new sustainability-linked loans, green bonds and green finance undertakings to property developers and asset managers, such as Henderson Land Development, Hongkong Land and Champion REIT, to support their sustainability journeys.
Separately, Kwoon Chung Bus has recently secured its first sustainability-linked loan from DBS Hong Kong that includes the green targets of a 9% slash in emissions reduction and an increased adoption of Euro VI diesel commercial vehicles (DCVs) in its fleet.
“We understand the importance of financing the transition towards a low-carbon economy. These transactions reflect our commitment to encourage companies to adopt more carbon-efficient operations and commercially viable greener alternatives,” says Paredes. “The awards and accolades we have earned on our achievements in sustainable finance are testimony to our efforts in developing innovative, broad-based offerings across products, geographies and sectors.”
Responsible business practices
As a responsible corporate citizen, DBS is on track towards meeting its net-zero operational carbon emissions in 2022 by reducing its carbon footprint as well as advancing the sustainable procurement agenda. It also offers a hybrid work model, works towards zero food waste; and seeks to offset emissions with projects that reduce emissions in other geographies with the launch of global carbon exchange and marketplace – Climate Impact X (CIX).
Closing the loop on food waste
To contribute to the circular economy and advocate for others to reduce waste and close the loop on food waste, DBS Hong Kong has partnered with Taikoo Place and Rooftop Republic Urban Farming, a local social enterprise supported by DBS Foundation, to build The Loop at One Island East (OIE) in Taikoo Place – arguably Hong Kong’s highest urban farm, at 300 metres above ground.
The farm grows more than 30 types of organic seasonal crops throughout the year. Food waste from the DBS Hong Kong office in the building will be turned into compost for use on this rooftop farm. The fresh produce is donated to the local food bank to support the community at large.
Creating social impact
Including Rooftop Republic Urban Farming, DBS Foundation has nurtured over 640 social enterprises across Asia since 2014. It is increasing the funding pool of its 2021 DBS Foundation Social Enterprise Grant Programme to SGD 3 million (HKD 17 million) – more than double last year’s grant amount.
DBS Hong Kong also partners with GreenPrice Supermarket, a social enterprise retailing surplus and short-dated food, encouraging its credit cardholders to join the movement with special offers.
“Not only do we believe that it is incumbent on us to step up our sustainability efforts in our business, but we’re also passionate about the well-being of our employees and society. Most importantly, as a leading Asian bank, we’re on a mission to help create a greener and better world for everyone,” says Paredes.