SINGAPORE: OCBC Bank has set an ambitious new target of S$25 billion by 2025 for its sustainable finance portfolio, having surpassed its original S$10 billion target in the first quarter of 2020 – two years ahead of its 2022 schedule.
In a press statement, it said it has seen a significant increase in the demand for sustainable financing in recent years due to better awareness and heightened efforts to combat climate change. Natural disasters, including the Australian bushfires and heat waves in Japan and India in 2019 highlighted the urgency of the situation.
Reports of lower pollution and clearer skies amidst the Covid-19 quarantines and scaled-down business activities helped to draw even more attention to the environment.
Last year, it noted that OCBC Bank witnessed a strong demand for green and sustainability-linked loans. Of the more than 20 such loans that the bank participated in last year, it acted as sustainability advisor or coordinator for more than 10 of them. Good progress was also made in the financing of renewable energy projects, following the bank’s announcement in April 2019 that it would no longer finance new coal-fired power plants. In 2019, the bank participated in solar, onshore wind and offshore wind projects, in Taiwan, China, the US, Australia and Malaysia.
Sustainable finance’s strong growth momentum is expected to continue over the next few years despite Covid-19. The United Nations has urged governments to view the pandemic as an opportunity to build a more sustainable economy. The European Union’s economic recovery package already has portions earmarked for green purposes.
International Energy Agency’s recently released Sustainable Recovery Plan has laid out a US$3 trillion green recovery roadmap that can be taken over the next three years to revitalise economies and boost employment while making energy systems cleaner and more resilient.
The bank said it would focus on driving growth in the following two areas to reach its ‘25-by-25’ target which includes industry diversification by including more renewable energy, clean transportation, education, water and waste management industries, and geographical diversification by leveraging on its international network of branches and offices across the region.
OCBC Bank Structured Finance and Sustainable Finance head Mike Ng, “The awareness and interest in sustainable projects has been increasing over the last few years, and Covid-19 has helped to draw attention to wider sustainability issues, including social ones. In the wake of the pandemic, the collective action taken by both the public and private sectors can help to rebuild economies in a more sustainable fashion.
“Sustainable finance will therefore continue to be key and it is important for us to have this ambitious target that we as an organisation can strive towards. We believe our ‘25-by-25’ target defines our commitment in addressing the challenges presented by climate change, and in contributing to the achievement of the United Nations Sustainable Development Goals.
As our clients continue to incorporate sustainability into their business models and corporate strategies, we expect the sustainable finance momentum to gather even more pace. And with the further development of the sustainable finance ecosystem, we are confident that more industry players in the region will join us on this journey.”
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