SINGAPORE – The largest bank in Singapore, DBS Group Holdings, has said it is not practical to expose customers to coal exposure in the short term.
DBS announced on Friday that it intends to eliminate exposure to thermal coal by 2039.
To get there, DBS will stop accepting new customers who with immediate effect get more than 25% of their income from thermal coal. And from January 2026, the bank will stop financing customers with more than 50% of their income from thermal coal – in addition to their non-thermal coal or renewable energy activities.
DBS CEO Piyush Gupta explained the 50% threshold and said it was ‘impossible’ to expect energy executives BP, Exxon Mobil and Shell to significantly reduce their oil business in the next five years.
Piyush Gupta, CEO of DBS Group Holdings.
Bryan van der Beek | Bloomberg | Getty Images
“Similarly, the whole bunch of conglomerates we are dealing with, for whom coal is one part of their business, but they are increasingly trying to do other things, they are trying to build a renewable business and trying other forms of activities,” he said. Told CNBC’s “Squawk Box Asia” on Friday.
“When we say we will not deal with any customer if your coal becomes very difficult more than 50% of the business, it’s just the practical reality. You do want to help them do the other things, you want to help if “They’ve building a wind farm, you want to help them continue and diversify their business, you want to help them in the transition,” said Gupta, who is a member of CNBC’s ESG board.
Avoid ‘green wax’
Banks worldwide have come under pressure from shareholders and lobbyists to stop financing coal and play a greater role in promoting sustainability practices among their clients.
Gupta acknowledged that it is ‘very difficult’ to make sure that businesses do not ‘wash green’ – a term used to give a misleading impression of green credentials.
Part of the problem is not having a clear framework for measuring how companies meet their ESG goals, environmental, sustainability and management goals, says the CEO.
ESG is a set of criteria used to measure a company’s performance in areas ranging from carbon emissions to contributions to society and staff diversity.
“The reality is that in many cases we rely on our customers to make known what they do. I can not physically go to every mine they have all over the world, to every plant they have around the world,” he said. said and added that DBS also uses third-party consultants to audit and monitor clients.
As attention to ESG practices increases, disclosure standards are likely to improve, Gupta said.
“Although there will be side-by-side washing, I think the degree of investigation is increasing, which will enable people to become more and more comfortable that what is being done is indeed the right thing to do,” he said. .