UOB sets out plan to meet net-zero emissions targets by 2050

UOB has set out emissions targets in six carbon-intensive sectors it finances in order to meet its net-zero emissions commitments by 2050. PHOTO: ST FILE

SINGAPORE - UOB has set out emissions targets in six carbon-intensive sectors it finances in order to meet its net-zero emissions commitments by 2050, the second bank in the region to do so.

This 2050 goal will be met by cutting financing to new upstream gas and oil projects and setting emissions reduction goals in other sectors, among other things.

Mr Wee Ee Cheong, deputy chairman and chief executive of UOB, announced the plans at an event at the home-grown bank’s office in Raffles Place on Monday.

In September 2022, DBS was the region’s first bank to unveil its net-zero plan.

The six sectors UOB is targeting are power, automotive, oil and gas, which are part of the energy value chain, as well as real estate, construction and steel, which are part of the built environment value chain.

These make up 60 per cent of the bank’s corporate lending portfolio.

They were chosen based on three principles: First, a focus on sectors with the highest greenhouse gas emissions; second, a focus on sectors with the largest expected decline in greenhouse gas emissions in the coming years; and third, covering sectors which UOB has the most influence in, where the bank has the greatest potential to effect change.

For the oil and gas sector, the bank said it has committed to no new project financing for upstream oil and gas projects approved for development after 2022, the first bank in Asia to do so.

Upstream oil and gas projects include onshore and offshore drilling.

In addition, UOB has committed to exit financing for the thermal coal sector by 2039.

For the other five sectors, the bank has set interim emissions reduction goals for 2030 and net-zero targets by 2050. UOB has also set targets to reduce emissions intensity for these five sectors.

Emissions intensity is measured differently for each sector.

For example, in the power sector, it is measured in kilograms of carbon dioxide produced per megawatt-hour of energy.

For the power sector, the bank has set a goal to reduce emissions intensity by 61 per cent by 2030 and by 98 per cent by 2050.

The bank will do this in ways such as by increasing its financing of renewable energy and not financing any new thermal coal developments.

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Mr Wee said: “We will first start with sectors that are most material to decarbonisation and our business, interconnected sectors where we can best support our clients and their transition.”

He added that it will be a challenging journey for some businesses, especially small and medium-sized enterprises that might lack the resources to collect environmental, social and governance data.

He said it will be even more complex for companies that operate across multiple markets.

When asked what UOB would do if it realises that it will not meet its 2030 or 2050 targets, chief sustainability officer Eric Lim said that net-zero commitments require each part of the ecosystem, such as the economy, governments and regulators, to move towards the same goal.

If targets are missed, it will not be due to UOB’s lack of commitment or effort, Mr Lim said, and instead “is a sign that the necessary policies and pathways are not put in place”.

“We will play a critical role in bringing that feedback to our regulators, national leaders and economy stakeholders,” added Mr Lim.

UOB said it has applied to join the global Net Zero Banking Alliance.

The alliance is made up of 121 banks from 41 countries with US$70 trillion (S$99 trillion) in assets.

Over time, the bank will also expand the scope of its targets to include additional sectors.

UOB’s new policies are important steps, said Ms Binbin Mariana, Asia energy finance campaigner at climate activist group Market Forces.

She stressed the need for the bank to take faster action to end financing for coal, oil and gas production.

She gave the example of coal company Adaro Energy Indonesia Group, which is currently financed by UOB, among other banks, yet expanding its coal production.

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