[SINGAPORE] THE global effort to combat climate change has faced significant headwinds in recent years.
Under the Trump administration, the US withdrew from the Paris Agreement, a landmark international treaty to tackle climate change. More recently, several major financial institutions, including American and Japanese banks, exited the Net-Zero Banking Alliance, a coalition committed to aligning banking practices with net-zero greenhouse gas emissions by 2050.
Despite this shifting landscape, OCBC remains committed to its decarbonisation agenda. “For OCBC, our position remains the same because climate change is still a real issue based on science, and it is our responsibility to be part of the solution as a connector of capital,” says OCBC’s group chief sustainability officer Mike Ng.
The bank offers strategic advisory, innovative financial solutions and ecosystem partnerships to help large corporations, small and medium enterprises (SMEs), and retail investors achieve their sustainability goals.
Ng acknowledges that the journey to net zero is fraught with challenges and “will never be linear”.
Nevertheless, he stresses that OCBC’s commitment to sustainability is not an “academic exercise” but a long-term business strategy for the bank that shapes its portfolio and guides how it supports industries and clients in their green transition.
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While climate efforts globally may appear to be losing momentum, Ng believes that significant opportunities remain in the transition to net zero, particularly in Asia.
A World Economic Forum white paper from 2023 estimated that climate adaptation and mitigation initiatives in Asia could unlock an additional US$4.3 trillion in revenue and create 232 million new jobs in the region by 2030.
Ng points out that industries such as renewable energy and electric vehicles have already achieved commercial viability, and that some OCBC clients are actively increasing their investments in these areas across the bank’s key markets.
These markets include China, which has emerged as a green industry powerhouse. The country added 373 gigawatts of renewable energy capacity in the past year and now accounts for more than 70 per cent of global EV production. In 2024 alone, it exported nearly 1.25 million electric cars.
Investments are also being made in emerging technologies. In 2024, OCBC participated in the project financing of a large-scale carbon capture and storage (CCS) project in the UK. CCS technologies are currently being explored in various markets in Asia.
The business case for sustainability
Ng cautions that the risks of inaction against climate change remain high, especially in Asia, which is expected to bear the brunt of the physical consequences of climate change. “We need to continue to pay attention, especially from a loan portfolio perspective, as part and parcel of sound risk management,” he says.
Ng notes that despite the broader global turn against decarbonisation, governments in the region remain focused on the transition.
For example, in the markets where OCBC operates, policymakers continue to promote regulations and guidelines pertaining to transition planning, sustainability reporting and sustainable financing, among others.
The global backtracking by some institutions also presents a timely opportunity to take stock of current decarbonisation policies and regulations, says Ng.
For example, sustainability reporting has become a “burdensome” requirement for some firms, potentially distracting from meaningful climate action. In this context, the European Union’s Omnibus package announced earlier this year aims to streamline sustainability regulations and ease compliance costs for companies, especially SMEs.
Ng also calls for a reassessment of the reference pathways – which set out emission reduction targets and deadlines – for underperforming sectors.
While a sector such as power is progressing well against its net-zero reference pathway due to the proliferation of renewable energy, others such as aviation and shipping are seeing slower progress due to the limited availability of green technology. This disparity suggests it may be time to recalibrate these pathways and targets.
“Because the more unrealistic those reference pathways and targets remain, the less inclined financiers, investors and businesses will be to commit to them. Without targets, it will be hard to galvanise action,” says Ng.
An opportune moment for action
In light of this, Ng believes it is all the more critical now to continue to encourage and support businesses to work towards their decarbonisation goals, rather than risk having them fall off the journey due to the difficulties.
“OCBC remains committed to supporting our clients in their net-zero transition and sustainability goals with financing as well as knowledge and tools,” he says.
The bank supports both large corporates and SMEs through three key areas: strategic advisory, innovative financial solutions and ecosystem partnerships.
For large companies, OCBC provides industry-specific advisory services, helping them quantify cost savings from undertaking emissions reduction initiatives and assess return on such investments.
The bank also extends financing to help them meet their sustainability goals.
Asia’s partner for a sustainable future
Its leadership in sustainable finance is reflected in recent accolades. With a committed sustainable finance portfolio of S$71 billion, OCBC was ranked the top Mandated Lead Arranger for Green and Sustainability Linked Loans in both Asia-Pacific (excluding Japan) and in South-east Asia by the London Stock Exchange Group last year.
OCBC also ranked eighth in Environmental Finance’s 2024 Sustainability Coordinators League Table, which showcases the top banks leading the charge globally in sustainability coordinator deal activity and volume. OCBC was the only Singapore bank on the list.
For SMEs which lack the resources of larger firms, OCBC helps them understand the steps they can take to decarbonise and to access the capital needed to do so.
For example, in February this year, OCBC partnered Enterprise Singapore to launch the OCBC SME Start-ESG Programme, which helps SMEs measure sustainability metrics, receive expert advice and access sustainability-linked loans (SLL). Last year, more than 110 SME clients received such loans – four times more than in 2023.
The bank also offers unique products, such as its first-in-market OCBC 1.5 degrees Celsius loan. Unlike other SLLs whose parameters are negotiated between the client and financial institution, the OCBC 1.5 deg C loan sets “science-based, measurable targets” for clients to lower their emissions, based on the industries they are in. Since its launch in 2023, OCBC has offered the loan to major corporates, including City Developments Limited, CapitaLand Ascott Trust and Cofco International.
Beyond businesses, OCBC also supports retail investors on their sustainability journey. In February 2024, it launched the OCBC Sustainability Hub on its mobile app, allowing users to view the ESG rating of their investment portfolios. This feature helps individuals make more informed investment decisions and contribute to sustainability in a tangible way.
Staying the course
Ng reiterates that OCBC’s net-zero commitment in its financed emissions is a “strategic, long-term decision”, aligned with the enduring nature of climate change.
He acknowledges that some companies may choose to pause their green transition efforts for now, focusing on more immediate business challenges such as the impact of US tariffs.
Even so, he urges businesses to view decarbonisation as an integral part of their long-term strategy. As larger corporations increasingly scrutinise the emissions of their supply chains, smaller suppliers will find it in their business interest to reduce their own emissions in order to stay competitive. Improving on their sustainability metrics also allows companies to tap into the growing pool of sustainable finance.
Says Ng: “Climate change will come back and bite us one of these days, sooner or later, in one way or another. So it’s better to be prepared than not to be prepared.”
