Since more people want to do business with a morally acceptable bank that upholds their most important values, many banking firms are considering adopting sustainable banking practices.
To assess the sustainable development and social implications of the financing and investment decisions made by a business, sustainable banking, in the context of financial services, takes ESG factors into account.
To address complex sustainability issues, many leading banks and companies have been collaborating with governments, non-profits, communities, industries, peers, and customers.
For instance, a number of UN Global Compact participants, such as DBS, are committed to promoting and advancing sustainable development. Some of the SGDs that DBS has selected for their noteworthy contributions include the following:
- Accountable Banking
DBS’s responsible banking practices assist its clients in creating the transition to low-carbon business strategies, offer customized retail solutions that are catered to their needs, and help them with ESG investment decisions.
Teamwork is essential to addressing or combating climate change. The International Panel on Climate Change has a clear mandate for businesses and individuals to cooperate in preventing and starting to reverse global warming to 1.5 degrees Celsius above pre-industrial levels by reducing greenhouse gas (GHG) emissions and reaching a net zero level by 2050.
“Decarbonization” is a business idea that will define a generation. Global investment in renewable energy alone will need to triple to about $3.5 trillion annually by 2030, and almost every sector will need to increase investment.
The fact that DBS was the first financial institution in Singapore to participate in the Net-Zero Banking Alliance (NZBA), as well as the first to publish a set of emission reduction targets because of its Scope 3-financed projects in Southeast Asia, shows that it is doing its part. These objectives will direct its strategic funding allocation towards low-carbon substitutes, far from high-emitting activities.
- Corporate Social Responsibility
Many banks are in favour of incorporating environmental and socioeconomic concerns into their daily operations. Gaining their confidence requires building trust and the conviction that in order for a community to thrive, businesses and communities must create solid bonds based on trust, which can only be attained by preserving the ideals of openness and justice.
- Operational Sustainability
By 2022, DBS aims to have net zero carbon emissions from all of its operations in all of its markets. By 2030, the business’s operations in Singapore will solely rely on renewable energy. They are made to achieve these objectives through an approach that provides long-term environmental benefits rather than focusing on purchasing offsets as a mitigation plan.
Using a four-lever approach, a well-known bank in Singapore manages its energy consumption and carbon footprint by giving the first two a higher priority and utilizing the other two to manage what they cannot.
Lever 1: Decrease consumption
Their top priority is lowering the energy footprint of their operations. In 2021, they transformed one of their older office towers into the first bank-owned net zero energy building in Singapore, one of fewer than 500 such structures worldwide.
Lever 2: Generate clean power
To boost its operations and maintenance of renewable production, the bank has adopted an “Everything Solar Everywhere” strategy that mandates that every appliance installed in the office runs on renewable energy whenever possible. They have consequently put solar clusters in their buildings in addition to solar-powered fans, lighting, air conditioning units, parking lamps, fountain pumping systems, and ATM kiosks throughout all of the areas they serve.
Lever 3: Invest in green energy sources
The bank is committed to reducing its consumption and operating as much of its operations as it can use renewable energy. They avoid buying energy by using sustainable energy sources whenever possible.
Lever 4: Carbon offsets
Nevertheless, they acknowledge that to practices reach their net zero functioning carbon goals, offsets must be purchased in the form of carbon credits, or RECs (Renewable Power Certificates).
- Sustainable Purchasing
As a major financial institution in Asia with a growing global presence, the bank should consider ethical and environmental factors in addition to financial ones when making procurement decisions. The following are part of its supply chain management programme, which is constantly being enhanced and innovated.
- launching a restorative enterprise in partnership with ecosystem partners to increase restorative procurement
- To ensure a diverse global supply base and promote effective sourcing of goods and services, it is important to invest in the capacity development of a more robust supply chain.
- prudent resource management
- implementing a risk management strategy to continuously monitor our supplier base while using various processes and tools
- Affordable and Clean Energy
The bank significantly influences and promotes its clients’ sustainable practices through responsible finance. It incorporates ESG considerations into its guiding principles for loaning money and taking part in capital market activities through the Group Responsible Financing Standard and Group Core Credit Risk Policy. By facilitating trade and allowing investment to continue to flow as well as providing credit, it addresses ESG issues.
- Growth in the Economy and Equitable Employment
It encourages sustainable development by providing accessible and related financial services to organisations, companies, and individuals that are frequently underserved and dedicated to advancing the SDGs.
- Industry Infrastructure and Innovation
DBS is committed to helping businesses build the capacity necessary to manage ESG risks in their daily operations. The Equator Fundamentals, a structure for risk management used by financial institutions worldwide to identify, assess, and handle social and environmental hazards related to projects, are adhered to and put into practice. Additionally, it nudges clients to determine whether they follow international best practices.
- Community Service
DBS believes it can help establish a more welcoming and environmentally friendly society, so they are here to work with you to make small but significant contributions to the country’s economic and social growth. inexpensive and clean energy
- Addressing Financing Gaps for Small Businesses
DBS also contributes by participating in several government-sponsored initiatives that provide working capital financing and micro-loans to aid small and medium-sized enterprises (SMEs) in developing and expanding their businesses. It has also enhanced funding for local SMEs and social enterprises (SEs), which are underserved, to develop their skills and capabilities to scale businesses.
- Having an Impact on Society
By investing in the neighbourhoods where they operate, DBS supports businesses and social entrepreneurs who have a double bottom line (DBL). Profit and loss are tracked along with financial performance in this process.
In conclusion, the banking sector actively endorses several sustainable banking systems to preserve the environment for generations to come.