DBS making climate adaptation a strategic priority, says its chief sustainability officer

SINGAPORE – DBS Bank, South-east Asia’s largest bank by assets, is in 2026 making climate adaptation a strategic priority. It is moving to learn more about how financing solutions can be structured to fund the development of initiatives that can protect people and places from the impacts of climate change.

The bank’s chief sustainability officer Helge Muenkel told The Straits Times this in an interview on March 12, about a week after Singapore’s Ministry of Sustainability and the Environment said on March 3 that it is making climate adaptation a national priority for 2026.

“Climate adaptation is a core strategic priority for us... What we will do now is we will leverage the work we have already done on physical risk assessments... and ultimately leverage these insights to engage customers on that,” he said.

Climate adaptation refers to actions that reduce the impact of climate change on communities. This includes building coastal defences to protect land from rising sea levels and protecting the vulnerable against extreme heat.

Physical climate risk assessment refers to the identification, analysis and evaluation of physical risks that businesses face from the impacts of climate change, such as wildfires or rise in temperatures.

Such assessments can improve the resilience of the financial sector and help companies identify opportunities for climate adaptation.

The bank will soon announce a partnership with a global think-tank to look into how solutions in this area can be financed, said Mr Muenkel. More details will be given at a later date.

Such financing solutions could span a range of instruments, he noted, pointing to existing schemes, such as sustainability-linked loans or green bonds, that could be developed for adaptation. There could also be public-private partnerships where risks and costs are shared.

In October 2025, the Tokyo Metropolitan Government issued a €300 million (S$440 million) bond – the world’s first certified resilience bond – to bolster coastal and flood defences and other climate-related measures.

“Fundamentally, it’s about allocating capital into adaptation,” Mr Muenkel said.

Underfunded for years compared with climate mitigation, or efforts to reduce planet-warming emissions, climate adaptation has seen slow progress.

But the faster the climate changes and the further adaptation efforts are postponed, the more difficult and expensive responding to climate change will be.

According to a 2025 report by the UN Environment Programme, developing nations will need more than US$310 billion (S$398 billion) a year by 2035 to prepare for the impacts of climate change. However, international public adaptation finance flows to developing countries were only US$26 billion in 2023.

The urgency of the need to adapt to climate change impacts has picked up globally in the last two years or so, noted Mr Muenkel.

“We’re now more and more focused on adaptation. There is this realisation there’s a huge financing gap and that the impacts are real and they’re coming, as weather patterns are going to be more extreme, more frequent,” he said.

“The impacts are already occurring. They are significant, and we need to now complement the mitigation efforts to ultimately protect people, communities, businesses and economies.”

He cited a 2025 report on natural disasters by reinsurer Munich Re, which had highlighted how the Asia-Pacific region suffered losses amounting to US$73 billion because of disasters such as cyclones and floods. Yet, only about US$9 billion of these losses were insured.

Discussions are now picking up among financial institutions and the private sector on how adaptation efforts can be funded.

Compared with mitigation projects such as the construction of a renewable energy facility, many adaptation initiatives, such as building a sea wall, often do not bring in revenue. This has made it difficult to get the private sector involved in financing such efforts.

Yet, a November 2025 report by global management consultancy BCG noted that mobilising large-scale adaptation finance means involving public, private and philanthropic capital.

However, the benefits of adaptation projects are often tied to avoiding the cost of inaction or generating broader societal benefits, which are challenging to quantify and monetise, making investments less attractive to private capital providers, said the report.

Mr Muenkel said this makes it difficult for private capital providers to price such investments, adding that this was a major challenge for scaling up adaptation finance.

But he said financial institutions like DBS can help plug this gap by developing new financial instruments or financing frameworks for such projects.

Moreover, the bank has capabilities to assess physical climate risks and will look into turning such data into financial risks to help companies better understand and manage the costs of climate change, he said.

Part of the suite of initiatives that Singapore plans to roll out on climate adaptation is passing a new coastal protection law.

Under the new legislation, government agencies and private companies that occupy land along Singapore’s shorelines must implement measures to shield their coastal areas from rising seas.

However, while waterfront companies here recognise the need to protect their assets from rising seas, they are concerned about how lease renewals and the costs of implementing coastal defences will affect their business viability.

The need to adapt to climate change goes beyond Singapore, Mr Muenkel noted.

He said that as a financial services centre, Singapore has the potential to serve as a hub for adaptation and resilience finance.

Adaptation is critical for South-east Asia as it is highly vulnerable to climate change. The region is exposed to multiple climate risks and hazards such as rising temperatures, sea-level rise, increasing droughts and floods, and the intensification of extreme events like typhoons.

These events are already impacting ecosystems, agriculture and food production and infrastructure, and there is an urgent need to ensure communities have the capacity to build resilience to face oncoming risks.

Mr Muenkel said the focus on climate adaptation should not detract from the urgency of moving to reduce greenhouse gas emissions.

He added that even though many other geopolitical developments were top-of-mind, investing in sustainability remains a good business imperative.

In its latest sustainability report released on March 9, DBS said it issued $41 billion in sustainable bonds in 2025, up from close to $38 billion the previous year.

These include bonds issued in clean energy, such as in the packaging of renewables with battery storage systems and investments in grid stability.

The bank’s sustainable financing commitments rose 14 per cent to $102 billion as at end-2025, from $89 billion in 2024.

“We must not forget we need to work as hard as we can to bring emissions down as fast as possible, but we simply need to get prepared,” Mr Muenkel said.

“A way to think about this is if climate mitigation is about avoiding the unmanageable, then adaptation resilience is about managing the unavoidable.”