Accelerating the transition to a net-zero future

Why this is Material to Us
Climate change presents ever-growing financial risks to our operations and business. Consequently, there have been increasing expectations regarding transparency around climate-risk reporting and transition planning from both internal and external stakeholders. Effectively managing these concerns is vital for the Bank to ensure our continued success as a regional leader in sustainable finance. Equally vital are our actions to capitalise on the global shift towards a low-carbon economy, which presents opportunities to work with our clients to finance the transition to net zero.

Our Management Approach
Tackling climate change is a complex and urgent challenge, requiring cooperation from a multitude of stakeholders. As a leading bank in the region, we recognise our unique position and ability to help drive climate action across the region through our role as a connector of capital. Our approach to climate management is tripartite, comprising:

1. Our net-zero commitment
We are committed to achieving net zero in our financed emissions by 2050, and have established quantitative, science-based decarbonisation targets for six of our priority sectors: Power, Oil and Gas, Real Estate, Steel, Aviation and Shipping. These sectors represent the most emission-intensive sectors that we finance; there are credible and established decarbonisation pathways for their respective sub-sectors. Our progress is tracked against interim 2030 targets, ensuring ongoing accountability for our efforts. These sectors present significant opportunities to partner with our clients in meaningfully contributing to a net-zero ASEAN and Greater China by 2050. By diversifying our product offerings to include transition and sustainable financing, we attract like-minded customers and direct capital to facilitate change in the real economy.

2. Managing our climate-related risks
We adopt an integrated and risk-based approach and consider the impact of current and future changes in operating environment. The effects of climate change can manifest in a multitude of ways. Both directly and indirectly, they could impact our business, by amplifying traditional banking risks, such as credit, market, liquidity, operational and reputational risks.

At a portfolio level, these risks are managed through a suite of scenario analysis models which provide insights into our sector credit exposures and help inform decision-making.

At the client level, these efforts are supplemented by the integration of ESG-related considerations into our credit risk assessment process, which identifies clients with significant ESG risks and escalates them for enhanced due diligence. This process helps minimise our exposure to activities with unmitigable environmental harm.

3. Managing our environmental footprint
We are committed to reducing the environmental footprint of our physical operations, complementing our loan portfolio decarbonisation efforts. We continue to maintain carbon neutrality in our operations through a suite of measures including the deployment of energy efficiency technologies that are constantly being enhanced to allow us to minimise negative impacts, even as the Bank looks to grow our operations.

Find out more about:
Our net-zero targets in our Net Zero Report
Our contributions towards net zero
Managing our environmental footprint

Why this is Material to Us
The world is currently confronting a triple planetary crisis: climate change, biodiversity loss and pollution. These interconnected challenges threaten the foundations of sustainable development and present risks to financial institutions like OCBC. They introduce additional risks to our clients – especially in certain sectors in our portfolio – which can result in reputational harm and increased credit risk exposure for the Bank. To address these concerns, we focus on mitigating risks to our business while also supporting clients in transitioning to a low-carbon economy.

Through robust ESG risk management and responsible lending, we aim to reduce exposure to climate-related risks, protect the long-term value of our clients’ assets and contribute to a sustainable future. Our goal is to safeguard business interests while empowering clients to achieve greener growth.

Our Management Approach
At OCBC, we embed core principles of risk management and responsible lending into our approach, ensuring that our financing activities account for environmental and social impacts as a foundational element of our business strategy.

Our Responsible Financing Framework and Policies serve as the cornerstone of ESG risk management within our lending practices. The Policies provide a comprehensive and structured framework that governs lending and debt-related activities, including debt issuance and underwriting, and they are applied consistently across new and existing corporate, commercial and institutional clients. A key feature is the emphasis on transition financing solutions that support clients in shifting towards more sustainable business practices.

For instance, recognising the need to support low-carbon transition beyond an indiscriminate withdrawal of financing from coal-fired power plants (CFPP), our Exclusion List has been updated to cater to the financing of CFPP towards their early retirement, subject to strict guardrails.

We maintain a strict policy of non-engagement in financing activities that are under our Exclusion List, which show clear evidence of unmitigable harm to the environment, people or communities, or that involve a breach of local regulations. In line with our climate commitments and given the interconnectedness between climate change and nature, we will not knowingly finance activities that have clear evidence of irreparable harmful impacts to the preservation of diverse ecosystems, which are vital for carbon sequestration and mitigation of extreme weather.

From the outset, our Exclusion List prohibits the financing of projects that have an adverse impact on nature and biodiversity. Furthermore, ESG risks in agriculture and mining, which are sectors broadly recognised to have an outsized dependency and impact on ecosystem services, are addressed in our Responsible Financing Policy for Agriculture and Forestry, and Responsible Financing Policy for Mining and Metals respectively.

Find out more about:
Our Responsible Financing Framework and Policies

Why this is Material to Us
As a leading financial services institution in Asia, OCBC recognises the critical role we play in engaging and supporting clients in their net-zero transition journeys. Leveraging our position as a connector of capital, we collaborate with ecosystem partners to provide streamlined tools, resources and expert advisory services that enhance clients’ transition efforts.

On top of that, our net-zero commitments necessitate offering innovative and tailored sustainable financing solutions to help clients achieve their sustainability goals. This entails widening our array of products to support all segments of our customer base in their transition journeys, including the SME and retail clients, who make up a sizeable portion of our portfolio.

Our Management Approach
At OCBC, we believe the transition to a low-carbon economy must be inclusive – empowering businesses of all sizes, across sectors and at every stage of readiness to advance their sustainability journeys. This commitment is at the heart of our vision for a Transition for All, ensuring that no one is left behind as we move towards a more sustainable future.

Since 2018, OCBC has been at the forefront of sustainable finance, delivering credible and innovative solutions that drive environmental and social impact. Over the years, we have expanded our green and transition financing to the various segments of our customer base, which range from corporates and SMEs to private investors and retail customers.

We work closely with our clients to identify climate-related opportunities and provide them with a wide array of financing solutions, including unique, first-in-market programmes across key markets and sectors. Our approach is tailored to each client’s unique needs – through discussions on sector-specific sustainability themes and emerging technologies, sharing market insights to anticipate regulatory developments and market trends, and advising on credible decarbonisation pathways aligned with industry best practices.

For SMEs, we adopt a dedicated approach focused on providing simple, practical and cost-effective tools to measure and manage sustainability performance. These engagements deepen our understanding of clients’ challenges and enable us to design financing solutions that support their transition and unlock emerging opportunities.

Our approach to sustainable finance is underpinned by the Global Wholesale Banking Sustainable Finance Taxonomy and leading market standards, including the Singapore-Asia Taxonomy. As a market leader in sustainable finance, OCBC actively shapes industry standards through participation in key working groups and regional collaborations. These include:

• Spearheading the development of the Guidance for Leveraging the Singapore-Asia Taxonomy in Green and Transition Financing under the SSFA;
• Partnering with WGBC to launch a first-of-its-kind report mapping green building tools against sustainable financing principles and the ASEAN Taxonomy;
• Contributing to the world’s first Facility-Level Just Transition Guidelines for Banks; and
• Participating in the China-Singapore Green Finance Taskforce, the Asia Pacific Loan Market Association Green and Sustainable Lending Committee and the Hong Kong Green Finance Association Banking Working Group (Financing the Transition).

We also support our retail customers in their personal sustainability ambitions. Our Sustainability Hub continues to empower our individual customers, furnishing them with the necessary insights for more sustainable investment decisions. At the same time, we constantly look for ways to integrate sustainability into personal financing solutions – for example, through our Eco-Care EV Loans.

Through this inclusive and forward-looking approach, OCBC remains committed to enabling a just and inclusive transition for all – one that delivers long-term value for our clients, communities, the environment and the broader economy.

Find out more about:
Sustainable Banking for Individuals
Sustainable Banking for Businesses