This new financing solution aims to incentivise corporates to commit to internationally recognised, science-based net-zero decarbonisation pathways.

Singapore, 20 March 2023 – OCBC Bank has launched a new loan for corporates, named the OCBC 1.5°C loan, as part of its commitment to supporting the world’s low-carbon transition.

This new financing solution incentivises corporates to set and work towards clear carbon emissions reduction targets aligned with internationally recognised, science-based net-zero decarbonisation pathways for their sectors. When the targets are met or exceeded, corporates will get a reduced interest rate on their loans.

The reference pathways, developed by autonomous global organisations, are geared towards achieving a net zero level of greenhouse gas emissions by 2050 to limit global warming to 1.50C above pre-industrial levels.

While many corporates have already set net-zero goals, these may not be robust or ambitious enough; for one thing, the goals may not be grounded in the latest research, according to The Net Zero Tracker, a global initiative that assesses global net zero targets to promote transparency and ambition. It states that science-backed net-zero pathways based on a 1.5°C scenario are now the baseline that corporates should commit to.

The OCBC 1.5°C loan reflects the Bank’s longstanding commitment to working with its customers to help them get started on their net-zero journeys.

Last October, OCBC Bank joined the Net-Zero Banking Alliance (NZBA), a global coalition of banks committed to aligning their portfolio with the Paris agreement goals. The Bank has also been working to support a transition to net-zero carbon emissions for customers in key sectors, including proactively engaging customers on the latest science-backed decarbonisation pathways associated with their specific sectors, and why it is important to adopt science-backed net-zero targets.

As it works with the corporates that take up the OCBC 1.5°C loan, the Bank will gain greater insight into their transition strategies, their progress on targets they have set and how they are tracking against industry peers. These insights will in turn enable the Bank to offer the most appropriate advisory and suitable financing solutions to support the corporates’ transition plans. At the same time, OCBC Bank will be able to more accurately assess its own overall ‘financed emissions’ – those associated with its loan portfolio – so as to measure its progress against its own net zero targets.

Mike Ng, Head of Sustainability Office, Global Wholesale Banking, OCBC Bank, said: “For the world to successfully transition to net-zero, businesses need to set ambitious, rigorous targets and follow through with strong initiatives to reduce emissions and measure progress. This mammoth task can only be achieved with the collaboration of all stakeholders. Our new financing solution aligned to a 1.5°C pathway is a concrete step to partner with our customers on their net-zero journey together. The only path to delivering our NZBA commitments is through our customers reaching net-zero, and we will do our utmost to support them through this journey.”