[SINGAPORE] OCBC’s sustainable financing portfolio is the most aligned with Singapore’s sustainable finance taxonomy among the three local banks, according to a Tuesday (Mar 18) report by the Monetary Authority of Singapore (MAS).
Nonetheless, a sizeable portion of the sustainable financing portfolio of the other two banks also adhered to the criteria within the Singapore-Asia Taxonomy.
These were some of the findings from the report, which assessed the extent by which the taxonomy has been adopted by financial institutions. Sustainable finance taxonomies set criteria and thresholds for a range of economic activities that would be considered eligible for sustainable and transition financing.
Sustainable financing is typically used for economic activities or companies that are already green, while transition financing is for carbon-intensive businesses that are looking to decarbonise.
The assessments in the MAS report were made retroactively. This means that past sustainable financing deals made before the taxonomy was finalised were mapped onto the Singapore-Asia Taxonomy to see if it was feasible to align future transactions with its benchmarks.
The report noted that the major portion of OCBC’s green financing portfolio meets the taxonomy’s thresholds, while more than half of DBS’ sustainable and green loan assets are broadly aligned with its green criteria.
A NEWSLETTER FOR YOU
Friday, 12.30 pm
ESG Insights
An exclusive weekly report on the latest environmental, social and governance issues.
As for UOB, the study estimated that between 35 and 45 per cent of its sustainable financing portfolio is aligned with the taxonomy.
“Going forward, financial institutions can push towards more financing solutions which are in alignment with the Singapore-Asia Taxonomy to further their commitment in sustainable financing,” read the report.
Since the Singapore-Asia Taxonomy was finalised in December 2023, all three banks were found to have either completed or are in the process of updating their sustainable financing frameworks to incorporate various aspects of the taxonomy.
The banks will also be using it as a key reference tool in how they structure green or transition financing solutions, stated MAS.
A few foreign banks have also started using the taxonomy to screen their sustainable financing transactions originating in Singapore. These are Maybank and CIMB.
Companies, including OUE and Green Esteel, have also used the taxonomy to structure their sustainable financing deals.
Second Minister for Finance Indranee Rajah said in a LinkedIn post that the taxonomy has gained “good traction” since it was launched.
“Singapore’s professional services sector plays a vital role in advancing the sustainable finance agenda and is well-placed to participate in these opportunities.
“Lawyers, consultants, external reviewers and auditors can help enhance credibility and boost investor confidence by ensuring that sustainable financing frameworks and products meet internationally recognised standards and credible taxonomies, such as the Singapre-Asia Taxonomy,” she added.
