Coal loans to keep Singapore’s DBS tied to the fuel until 2039

·1-min read
DBS signages are seen in Singapore, October 8 2019. REUTERS/Feline Lim
DBS Bank commits to zero thermal coal exposure by 2039. (PHOTO: REUTERS/Feline Lim)

By Chanyaporn Chanjaroen

(Bloomberg) — DBS Group Holdings Ltd. said it will maintain exposure to the coal sector until 2039, by which time its loans to mining and generation companies using the dirtiest fossil fuel will be repaid.

Singapore’s largest lender recognises the need for transition financing to help industries “gradually navigate away from brown to green,” Tan Su Shan, group head of institutional banking, said in a statement Friday.

Institutions providing financing for coal-fired generation are under increasing pressure from investors to exit the sector amid fears that the facilities will become stranded assets that pose financial risk, as governments seek to decarbonise economies.

DBS said it won’t take on new customers that derive more than 25% of revenue from thermal coal from now, and lower the threshold over time. The bank will also stop financing clients with more than 50% revenue from the fuel from January 2026.

DBS’s financing of renewable energy projects rose to S$4.2 billion (US$3.1 billion) last year, from S$2.85 billion in 2019.

The bank will disclose its thermal coal exposure in future annual sustainability reports, it said.

© 2021 Bloomberg L.P.