The framework and taxonomy will help DBS clients transition to more sustainable business models, providing them transition financing to do so.
DBS has published a Sustainable and Transition Finance Framework and Taxonomy, as part of its efforts to help clients from key industries transition to a low-carbon economy.
Hailed as the world’s first such framework by a bank, it will form the bedrock for DBS to engage with clients who are furthering their sustainability agenda. The taxonomy will 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.
To encourage greater transparency in sustainable and transition economic activities, 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). It also summarises a broad list of eligible economic activities, such as the use of recycled plastics for apparel making, or electricity grid upgrades to enable renewable energy.
“While pursuing our own sustainability goals, we want to encourage companies to transition towards more carbon efficient operations by considering commercially viable greener alternatives,” said Tan Su Shan, Group Head of Institutional Banking at DBS.
With the launch of the taxonomy, DBS also becomes Singapore’s first bank to offer transition financing, founded on a prudent and scientific approach to evaluating the transitional qualities of clients’ economic activities, including an assessment of whether they have a strategy to align their businesses with the Paris Agreement.
The framework will facilitate the categorisation, monitoring and reporting of sustainable financing, DBS says. “The implementation of the framework will involve robust governance and reporting processes that enable transparency.”
The Sustainable and Transition Finance Framework and Taxonomy is available here.