SINGAPORE – Singapore’s largest bank, DBS Group Holdings, said it is impractical to shut down clients with coal exposure in the short term.
DBS announced Friday that it aims to eliminate exposure to thermal coal by 2039.
To get there, with immediate effect, DBS will no longer take on new customers who generate more than 25% of their sales from thermal coal. 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 business.
Commenting on the 50% threshold, Piyush Gupta, Chief Executive of DBS, said it is “impossible” to expect energy companies BP, Exxon Mobil and Shell to significantly reduce their oil operations in the next five years.
Piyush Gupta, CEO of DBS Group Holdings.
Bryan van der Beek | Bloomberg | Getty images
“Likewise, the whole group of conglomerates we deal with, for whom coal is part of their business, but who are increasingly trying to do other things, they are trying to build a renewable business, they are trying to get into other businesses. of activities, ”he told CNBC’s“ Squawk Box Asia ”Friday.
“When we say that we are not dealing with any customer when your coal makes up more than 50% of the business, it gets very difficult and that’s just the practical reality. You want to help them with the other things, you want to help they build a wind power plant, you want to help them continue and diversify their business, you want to help them transition, ”said Gupta, a member of CNBC’s ESG Council.
Avoid ‘greenwashing’
Banks around the world have come under pressure from shareholders and lobbyists to stop funding coal and play a greater role in promoting sustainability practices among their customers.
Gupta acknowledged that it is “very difficult” to ensure that companies are not “greenwashing” – a term used to give a misleading impression of green credentials.
Part of the problem is the lack of a clear framework for measuring how companies are meeting their ESG goals – environment, sustainability and governance – the CEO said.
ESG is a set of criteria used to measure a company’s performance in areas ranging from carbon emissions to contributions to society and workforce diversity.
“The reality is, in many cases, we rely on our customers to disclose what they are doing. I cannot physically go to every mine they have around the world, to every plant they have around the world,” he said. adding that DBS also employs outside consultants to audit and monitor its clients.
As attention for ESG practices grows, disclosure standards are likely to improve, Gupta said.
“So while there will be greenwashing in the margins, I think the degree of scrutiny is increasing and people will feel more and more comfortable that what is being done is indeed the right thing,” he said.