OCBC Bank targets to hit $25 billion of sustainable financing by 2025

OCBC said it will diversify its efforts into various industries. ST PHOTO: KUA CHEE SIONG

SINGAPORE - OCBC has set a new goal of $25 billion for its sustainable finance portfolio by 2025 after surpassing its initial $10 billion target in the first quarter - two years ahead of schedule.

OCBC said on Monday (June 22): "The bank has seen a significant increase in the demand for sustainable financing in recent years due to better awareness and heightened efforts to combat climate change."

It noted that recent natural disasters such as the bushfires in Australia and heat waves in Japan and India last year highlight the urgency of the situation.

"Reports of lower pollution and clearer skies amidst Covid-19 quarantines and scaled-down business activities helped to draw even more attention to the environment," it added.

OCBC also saw a strong demand for green and sustainability-related borrowing last year. It participated in over 20 such loans, acting as sustainability adviser or coordinator for more than 10 of them.

It also announced in April last year that it would no longer finance new coal-fired power plants as part of its progress in funding renewable energy projects instead.

It took part in solar, onshore wind and offshore wind projects in Taiwan, China, Britain, Australia and Malaysia.

This growth momentum for sustainable finance is also set to continue in the next few years, despite the coronavirus pandemic, the bank added.

Mr Mike Ng, its head of structured finance and sustainable finance, said: "The awareness and interest in sustainable projects has been increasing over the last few years, and Covid-19 has helped to draw attention to wider sustainability issues, including social ones.

"In the wake of the pandemic, the collective action taken by both the public and private sectors can help to rebuild economies in a more sustainable fashion. Sustainable finance will therefore continue to be key and it is important for us to have this ambitious target that we as an organisation can strive towards."

The bank said it will diversify its efforts into various industries, with renewable energy, clean transportation, education, water and waste management seen as areas of high growth potential.

OCBC expanded its portfolio in January to the transport sector with an A$25 million green loan to ComfortDelGro Corporation to fund 50 hybrid buses in Victoria, Australia.

It also acted as adviser for the National University of Singapore's green finance framework in May, which lays down the guidelines for the university to enter into such transactions.

OCBC will spread its green efforts to more countries by leveraging its international network of branches and offices.

"Singapore has been developing its capabilities as a regional sustainable finance hub, and businesses around the region - Myanmar, Malaysia, Taiwan, Hong Kong, Korea and Japan and Australia - are increasingly looking to tap on this expertise," it noted.

OCBC has partnered Myanmar conglomerate Shwe Taung Group for the country's first green loan, worth US$44 million, which will be used to finance an integrated retail and commercial development in downtown Yangon.

Mr Ng said: "We expect the sustainable finance momentum to gather even more pace. And with the further development of the sustainable finance ecosystem, we are confident that more industry players in the region will join us on this journey."

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