The bank said its new framework will help clients on their journeys to more sustainable business models while providing timely transition finance and increasing transparency for transactions and projects.
DBS has launched the world’s first sustainable and transition finance framework and taxonomy and will offer transition financing as part of the bank’s efforts to help clients from key industries to transition to a low-carbon economy, the bank announced on Tuesday.
The bank said the framework will form the bedrock for DBS to engage with clients who are furthering their sustainability agenda and serve as a reference to guide clients to adapt and build resilience in the face of climate change, resource scarcity, and address critical global issues such as social inequality.
At the same time, the taxonomy outlines the way DBS manages transactions that are classified as Green, Transition and/or contributing to the United Nations Sustainable Development Goals (UN SDGs), and summarises eligible economic activities.
DBS said it will take a prudent, scientific approach to evaluate the transitional qualities of the economic activities and whether clients have a strategy to adapt their businesses to meet the threat of climate change and to limit the global temperature increase to 1.5 degrees Celsius above pre-industrial levels.
There are many interpretations of what constitutes transition finance. The bottom line is we cannot afford to dismiss clients who carry out activities which are less than dark-green but are nonetheless part of the mainstream economy instrumental to getting us below 1.5-degree temperature increase, Yulanda Chung, head of sustainability, institutional banking, said.
Every transitional step towards reducing carbon footprint will make a significant, cumulative difference over time, Chung added.
