CoalESGFinance

Major Asian bank says it’s not practical in the short term to cut off clients in the coal business

24views
  • It’s not practical to cut off clients in the coal business in the short term, said Piyush Gupta, chief executive of Singapore’s largest bank DBS.
  • DBS on Friday announced that it aims to eliminate thermal coal financing by 2039.
  • Gupta, a member of CNBC’s ESG Council, acknowledged that it’s “very hard” to make sure clients are not “greenwashing” — a term used to describe giving misleading impression of green credentials.

SINGAPORE — Singapore’s largest bank DBS Group Holdings said it’s not practical to cut off clients in the coal business in the short term.

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

To get there, DBS will cease taking on new clients that derive more than 25% of their revenue from thermal coal with immediate effect. And from January 2026, the bank will stop financing clients with more than 50% of their revenue from thermal coal — except for their non-thermal coal or renewable energy activities.

Explaining the 50% threshold, DBS Chief Executive Piyush Gupta cited how it’s “impossible” to expect energy majors BP, Exxon Mobil and Shell to reduce their oil business significantly in the next five years.

“Similarly the whole bunch of conglomerates that we deal with, for whom coal is one part of their business but they’re increasingly trying to do other stuff, they’re trying to build a renewable business, they’re trying to get into other forms of activities,” he told CNBC’s “Squawk Box Asia” on Friday.

“For us to say that we won’t deal with any client if your coal is more than 50% of business becomes very hard and that’s just the practical reality. You do want to help them do the other things, you do want to help them build a wind plant, you do want help them continue and diversify their business, you want to help them in the transition,” said Gupta, who’s a member of CNBC’s ESG Council.

Avoiding ‘greenwashing’

Banks globally have come under pressure by shareholders and lobbyists to stop financing coal and play a larger role in promoting sustainability practices among their clients.

Gupta acknowledged that it’s “very hard” to make sure that businesses are not “greenwashing” — a term used to describe giving a misleading impression of green credentials.

Leave a Response