DBS Bank of Singapore to finance coal projects, avoiding ‘green washing’

SINGAPORE – Singapore’s largest bank, DBS Group Holdings, has said it is not practical to discontinue customers with short-term coal exposure.

DBS announced on Friday that it aims to eliminate thermal exposure to coal by 2039.

To get there, DBS will stop receiving new customers who get over 25% of their revenue from thermal coal with immediate effect. And from January 2026, the bank will stop financing customers with more than 50% of their thermal coal revenues – except for their non-thermal coal or renewable energy activities.

Explaining the 50% threshold, DBS CEO Piyush Gupta mentioned how “impossible” it is to expect BP, Exxon Mobil and Shell to significantly reduce their oil business over the next five years.

“Similarly, the whole bunch of conglomerates we deal with, for which coal is part of their business, but more and more trying to do other things, trying to build a renewable business, trying to get into other forms of activities, “he told CNBC’s” Squawk Box Asia “on Friday.

“For us to say that we will not have to deal with any customer if your coal represents more than 50% of the business, it becomes very difficult and this is just the practical reality. You want to help them do other things, you want to help them build a wind farm, you want to help them continue and diversify their business, you want to help them in transition, “said Gupta, a member of CNBC’s ESG Board.

Banks globally have come under pressure from shareholders and lobbyists to stop financing coal and play a wider role in promoting sustainability practices among their customers.

Gupta acknowledged that it is “very difficult” to make sure businesses do not “wash green” – a term used to describe giving a misleading impression of green credentials.

Part of the problem is that there is no clear framework for measuring how companies meet their ESG goals – environment, sustainability and governance – the CEO said.

The 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 we rely on our customers in many cases to reveal what they do. I can’t physically go to every mine they have around the world, to every plant they have around the world,” he said. adding that DBS also uses third-party consultants to audit and verify its clients.

As the focus on ESG practices increases, disclosure standards are likely to improve, Gupta said.

“So while there will be green washes on the sidelines, I think the degree of control is increasing and that will allow people to feel more and more comfortable that what is being done is really the right things,” he said.