OCBC sets new SGD 25bn sustainable finance target

Written by Sharon Kimathi
25th June 2020

OCBC Bank has set a new target of SGD 25 billion ($17.9bn) by 2025 for its sustainable finance portfolio.

The Singapore-based bank surpassed its original SGD 10 billion target in the first quarter of 2020 – two years ahead of its 2022 schedule.

It has seen a significant increase in the demand for sustainable financing in recent years due to better awareness and heightened efforts to combat climate change.

OCBC will focus on driving growth in industrial and geographical diversification to reach its “25-by-25” target.

OCBC will focus on industrial and geographical diversification to reach its “25-by-25” target.

“The awareness and interest in sustainable projects has been increasing over the last few years, and COVID-19 has helped to draw attention to wider sustainability issues, including social ones,” says Mike Ng, head of structured finance and sustainable finance at OCBC Bank.

“In the wake of the pandemic, the collective action taken by both the public and private sectors can help to rebuild economies in a more sustainable fashion.”

“We believe our “25-by-25” target defines our commitment in addressing the challenges presented by climate change, and in contributing to the achievement of the United Nations Sustainable Development Goals,” adds Ng.

Last year, OCBC Bank witnessed a strong demand for green and sustainability-linked loans. Of the more than 20 such loans that the bank participated in last year, it acted as sustainability advisor or coordinator for more than 10 of them.

See also: OCBC to hire 3,000 this year in full-time, traineeship positions

The bank is focusing on renewable energy projects, following the bank’s announcement in April 2019 that it would no longer finance new coal-fired power plants.

In 2019, the bank participated in solar, onshore wind and offshore wind projects, in Taiwan, China, the United Kingdom, Australia and Malaysia.

The United Nations is urging governments to view the coronavirus pandemic as an opportunity to build a more sustainable economy.

The European Union’s economic recovery package already has portions earmarked for green purposes. International Energy Agency’s recently released Sustainable Recovery Plan has laid out a $3 trillion green recovery roadmap that can be taken over the next three years to revitalise economies and boost employment while making energy systems cleaner and more resilient.

The bank has already made inroads into clean transportation and education. In January 2020, the bank expanded its sustainable finance portfolio to the transportation sector with an AUD 25 million ($17.2m) green loan to ComfortDelGro Corporation for the financing of 50 hybrid buses in Victoria, Australia.

The bank partnered with Shwe Taung Group on Myanmar’s first green loan in early 2020 – a $44 million green loan – to be used for the financing of Junction City Shopping Centre (Junction City), an integrated retail and commercial development in Yangon’s downtown.

It acted as green finance adviser for National University of Singapore’s green finance framework In May 2020, which provides the overarching criteria and guidelines for NUS to enter into green finance transactions.

OCBC Bank also partnered with telecommunications company Axiata Group Berhad on the first sustainability-linked Islamic financing undertaken in Malaysia worth $800 million in May.