Singapore’s banking sector has emerged as a leader in decarbonisation policies among advanced economies in Asia, according to a recent report by Asia Research and Engagement (ARE), a sustainability-focused consulting firm.
The report evaluated the climate goals and decarbonisation strategies of nine banks across Singapore, Japan, and South Korea, highlighting significant differences in their approaches to managing financed emissions.
The report identified Singapore’s three major banks—DBS, OCBC, and UOB—as having the most comprehensive and ambitious decarbonisation policies in the region.
These banks are the only ones among their counterparts in advanced Asia to have set medium- and long-term targets aligned with limiting global warming to no more than 1.5 degrees Celsius.
Specifically, their targets focus on reducing financed emissions in key carbon-intensive sectors, reflecting a strong commitment to global climate goals.
In the oil and gas sector, Singapore’s banks stand out for their stringent decarbonisation policies. OCBC and UOB have pledged to cease financing for upstream oil and gas activities, while DBS has committed to reducing its absolute financed emissions in the sector by 2050.
Additionally, these banks are the only ones in advanced Asia to include facilitated emissions—off-balance-sheet emissions from capital market services and transactions—in their net-zero-by-2050 commitments.
The ARE report underscores the alignment of Singapore banks’ financing strategies with global benchmarks, such as the International Energy Agency’s net-zero emissions scenario.
This comprehensive approach sets them apart from their peers in Japan and South Korea, whose sectoral targets are described as narrower in scope and less detailed.
For instance, Japanese banks Mizuho, MUFG, and Sumitomo Mitsui have only set 2030 targets for key carbon-intensive sectors, which are not based on a 1.5-degree scenario.
South Korean banks, including Hana, KB, and Shinhan, have yet to set any targets for the oil and gas sector.
Moreover, the report notes that none of the banks in Japan or South Korea have committed to stopping the financing of new upstream oil and gas projects, although some have introduced plans to restrict such financing.
In contrast, Singapore banks have made more significant strides in this area, with DBS and OCBC advancing the furthest in phasing out fossil fuel financing among the nine banks assessed.
However, the report also highlights areas where Singapore banks could improve. Despite their leadership in several areas, they have not committed to a complete deadline for ending financing across the entire oil and gas sector, including upstream, downstream, and gas-fired power generation assets.
This gap is also observed among the other banks assessed in Japan and South Korea.
For instance, DBS aims to reduce absolute financed emissions in the oil and gas sector by 92% by 2050 from 2020 levels, covering upstream, downstream, and integrated companies.
OCBC targets a 95% reduction by 2050 from 2021 levels, focusing on upstream and integrated companies.
While UOB has ended financing for upstream oil and gas, it has not set a specific reduction target for the sector’s financed emissions, although it has indicated plans to phase out downstream activities through financing restrictions on other sectors.