As part of its commitment to being net zero in its financed emissions by 2050, DBS has set science-based decarbonization and data targets in nine industry sectors that will guide its financing activities.
Decarbonisation targets have been set for seven sectors: power, oil and gas (O&G), automotive, aviation, shipping, steel and real estate. Data coverage targets have been set for the food and agribusiness, and chemical sectors, paving the way for future sectoral decarbonization targets.
With the range of sectors covered, the bank’s commitment is among the most comprehensive among global banks. Its approach to target-setting is also rigorous and science-based, being benchmarked against internationally recognised and industry-accepted glidepaths, such as the International Energy Agency’s Net Zero Emissions by 2050 Scenario (IEA NZE).
The publication of this clear actionable plan to net zero follows the bank’s announcement in October 2021 that it had become a signatory of the Net-Zero Banking Alliance, the first Singapore bank to do so. As a signatory, it is required to align its lending and investment portfolios with net-zero emissions by 2050.
The net-zero plan covers the most carbon-intensive segments of DBS’ lending book and capital market activities. The nine sectors represent the most carbon-intensive institutional banking segments financed by the bank and 31% of its outstanding loans, but they constitute the vast majority of the institutional banking group’s financed emissions.
Among the seven decarbonization targets set, six of them are set as intensity metrics with the objective to achieve lower emissions per unit of output or activity. This reflects the bank’s goal of embarking on a net-zero path that is consistent with inclusive and sustainable growth and prosperity.
Acknowledging that the path to net zero requires a lower usage of fossil fuels, an absolute emission reduction target has been set for the O&G sector. By 2030, the bank has targeted to reduce the absolute emissions in the sector attributable to it by 28%, fully aligned with the IEA NZE scenario. The bank’s O&G target will cover Scope 1, 2 and 3 emissions.
This complements its earlier commitment made in 2019 to progressively phase out thermal coal financing. In addition, the decarbonisation targets go beyond the bank’s institutional banking lending book and will cover capital markets activities as well.
“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,” says Piyush Gupta, DBS Bank’s CEO. “That is why I am pleased that we are able to announce [this] set of ambitious, broad and measurable actions that we can execute against. The decarbonization targets will act as the north star for our financing activities guiding us to net zero by 2050 through measurable change.”