Singapore-based financial services group DBS announced today a series of 2030 sectoral decarbonization targets aimed at cutting the emissions footprint of the company’s finance and investment activities in key carbon-intensive sectors, in alignment with its 2050 net zero goal.
Financing activities typically make up the vast majority of financial institutions’ climate impact, with financed emissions often hundreds of times greater than operational emissions.
The unveiling of the new goals follows DBS’ announcement in October 2021 that it had joined the Net Zero Banking Alliance, a coalition of banks committing to align operational and attributable emissions from their portfolios with pathways to net-zero by 2050 or sooner. Signatories to the alliance are obligated to set intermediate targets for 2030 or sooner using robust, science-based guidelines.
Piyush Gupta, Chief Executive Officer, DBS Bank said:
“Our firm conviction is that our net zero commitment, made last October, must be supported by a clear and detailed roadmap and plan. However, charting a viable course of action that is constructive and impactful is not easy, given challenges in mapping out suitable industry pathways and realistic medium-term milestones in markets with differing starting points. That is why I am pleased that we are able to announce today a set of ambitious, broad and measurable actions that we can execute against.”
DBS’ new commitments include decarbonization targets for seven sectors – Power, Oil & Gas, Automotive, Aviation, Shipping, Steel, and Real Estate – and ESG data coverage targets to receive emissions reporting information from clients for the Food & Agribusiness and Chemicals sectors.
While the sectors account for less than a third of the bank’s outstanding loans, they account for the vast majority of financed emissions.
The sectoral goals include commitments to reduce the emissions intensity – or emissions per unit of activity – for the Automotive sector by 57%, Aviation by 16%, Power by 47%, Real Estate by 42%, Shipping by 23%, and Steel by 27% by 2030, compared to 2020 levels. DBS set an absolute emissions reduction target of28% for the Oil & Gas sector, covering Scope 1, 2 and 3 emissions, in the acknowledgement that “the path to net zero requires a lower usage of fossil fuels.”
DBS stated that its target setting approach is benchmarked against internationally recognised and industry-accepted glidepaths such as The International Energy Agency’s Net Zero Emissions by 2050 Scenario (IEA NZE).
As part of the announcement, DBS said that it also aims to encourage its clients to accelerate their own transition journeys, and that the bank will support them with tools including sustainable and transition finance solutions.
Tan Su Shan, Group Head, Institutional Banking Group said:
“In the past few years, we have seen a significant increase in the demand for green and sustainable finance solutions. To accelerate the transition and meet the vast investment needs in the next few decades, we will proactively partner our customers, providing them with financial advisory and transition finance solutions, as we collectively work towards a low-carbon future.”