Social Responsibility and Sustainability

Our Climate Change Statement

Climate change has had a significant impact on our planet. With rising global temperatures leading to shrinking ice sheets, rising sea levels and the increasing prevalence of extreme weather events, it is widely acknowledged that climate change poses the greatest environmental challenge to our society and businesses today.

OCBC recognises that our financial success is intrinsically linked to the overall health of the markets we operate in. We are committed to advancing environmental and social (E&S) progress and to conducting our business in a responsible manner. By doing so, we will be able to support sustainable development in our markets and communities and create long-term value for our stakeholders.

Our Climate Change Statement affirms our support for the Paris Climate Agreement, which aims to keep the increase in global average temperatures to “well below 2°C above pre-industrial levels”. We believe that decarbonisation of the economy must be managed responsibly over time and will adopt a progressive approach to promote the transition to a low-carbon economy. This is aligned with our focus on Sustainable Development Goal 13 of taking urgent action to combat climate change and its impacts.

Our Commitments on Coal Sector Lending

We prohibit any new corporate financing or project financing for coal-fired power plants that use:

(a) Subcritical efficiency technology, and/ or
(b) Lignite (brown coal) as the main fuel source.

As part of our ESG Risk Assessment Framework, we perform enhanced E&S due diligence on our clients for all energy-related loans, referencing:

(a) International Finance Corporation (IFC) Performance Standards,
(b) Equator Principles (EP),
(c) Local/National laws and regulations.

Under our credit evaluation process, we conduct ESG risk assessment on borrowers at least once a year throughout the financing tenor. Additional assessments are conducted if and when significant ESG events arise. In addition, we may impose covenants in our credit facilities that require the borrowers to comply with ESG requirements. If the covenants are breached or our ESG expectations are not met, we will reassess the client relationships, including turning down transactions.

We aim to update our climate change statement with our mining (coal-specific) sectoral policy in due course.

Increasing Sustainability Financing

We will continue to seek and realise opportunities to partner our clients on sustainability performance-linked loans. By offering reduced interest rates for independently-assessed improvements in their ESG indicators, our clients will be financially incentivised and empowered to find innovative ways to enhance their sustainability performance. On 8 June 2018, we finalised a deal with Wilmar International to peg interest rates on a US$200 million revolving credit facility to its sustainability performance.

We are committed to channelling funds to support environmental investments which will in turn spur economic and climate resiliency across our core markets. The green bond market has emerged as an alternative source of funding and a platform to support the financing of qualifying assets/projects that combat climate change and its impacts. These qualifying assets/projects may include renewable energy, energy efficiency, sustainable water and wastewater management, green buildings and others.

Disclosure on Our Climate Change Efforts

Our annual sustainability report documents our consideration of and approach towards sustainability issues and demonstrates our commitment towards being a sustainable and responsible organisation. We will continue to track key performance indicators and disclose related information on our sustainable financing progress, referencing internationally recognised reporting standards such as the Global Reporting Initiative (GRI) Standards. Moving forward, we will explore the recommendations of the Task Force on Climate-related Financial Disclosures to enhance our disclosures.

Moving Forward

Sustainability is a journey and OCBC recognises that more needs to be done to support sustainable development. In line with this approach, we will continue to refine our climate change statement and enhance our responsible financing policies over time. Together with our customers, we will work towards further adopting appropriate sustainable practices and standards laid out by local regulations and to continue to reference international standards and industry best practices.