65 Chulia Street
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Managing Director, Head of Structured Finance and Sustainable Finance
Report Created by Aastha Srivastava
One of Singapore’s largest, safest, and highly-rated banks, OCBC was founded in 1932 through the merging of the Chinese Commercial Bank Limited, Ho Hong Kong Bank, and the Oversea-China Bank Limited.
Spanning across 18 different countries, with Indonesia being the most populated with 320 branches, OCBC has over 570 branches with 45 in Singapore itself. OCBC is more than just a multinational bank but also a financial services company.
Examples of its subsidiaries consist of the likes of Lion Global Investors, one of Southeast Asia’s largest asset managers and Bank of Singapore which is under total ownership of OCBC. Bank of Singapore shares OCBCs high Aa1 rating per the Moody’s Investors Services, and is known for wealth management services, financial analyses and investment and lending services.
While OCBC’s expansive services consist of corporate, investment, private and retail banking and treasury, wealth, investment and asset management.
Company Sustainability Activity
With a large subsection of the OCBC group website being devoted to sustainability their framework revolves around material ESG factors. OCBC uses a four-step process to isolate the most relevant and important ESG factors to act on.
The first is to identify the needs and interests of the stakeholders, then to prioritise said interests of the stakeholders based on their relevance to ESG implementation, validating these material ESG factors through board approval is the next step in the process and a final review is the last stage in this process to ensure that these material ESG factors are absolutely relevant to OCBC and its stakeholders.
OCBC looks into the financial risks of climate change and offers its changes on how to mitigate these risks. Their investment exclusion list demonstrates OCBC clarity in its climate change positionality, stating that the multinational bank will not invest in ‘coal-fired power plants’, ‘thermal coal mines’, and warfare weaponry. OCBC was the first southeast Asian bank to swear to not invest in fossil fuels.
Additionally, OCBC does not finance industries that use forced or child labour and projects where the location threatens sites of preservation, conservation and protection.
OCBCs annual publications of their sustainability reports, highlight their transparency and commitment to mitigating climate change. See the 2020 report here.
Acknowledging the role and importance that banks play in hindering the progression of the climate crisis, OCBC dedicates their Sustainable Finance Team to four key categories for development: Project Finance, Green Loans and Bonds, Sustainability-Linked Loans, Green Capital Instruments.
Investing in areas of clean transportation, renewable energy, wastewater management and pollution prevention and control, to name a few, constitutes OCBCs project finance. Project finance benefits the stakeholders by appealing to more environmental orientated consumers, attracting more investors who understand the need to shift to more sustainable projects, and attracting new and specialised employees.
Stakeholders recognise that green bonds increase longevity, sustainability and therefore the value of OCBC. In the Asia-Pacific region, OCBC largely allocates the assets of their green bonds to renewable energy, followed by green building.
In 2020, OCBC partnered with Mapletree Investments to provide a sustainability-linked loan of SGD 310 million for corporate funding processes that align with Mapletree Investments’ pre-set ESG targets. This was ‘the largest sustainability-linked loan for a Singapore real-estate developer’.
- Created 3,500 Singaporean jobs amid the covid-19 crisis
- Funded 30 green and sustainability-linked loans
- OCBC Future Start Programme – SGD 20 million towards employee training in sustainability perspectives
- > SGD1 million donated to migrant workers and families affected by covid-19
- Created a mentorship programme to help female employees achieve higher positions within OCBC
- SGD 25 billion towards sustainable finance portfolio by 2025
- Digitise 94% of financial transactions
- Disburse SGD 670 million new government-assisted loans in Singapore, Malaysia, and Hong Kong
- Increase digital customers on mobile bank to 82%
- Enhance the integration of climate-related considerations into ESG Risk Assessment processes by 2022
- Achieve Green Mark Certification for Bank of Singapore Centre by 2021
- Achieve Green Mark Award for all OCBC bank branches in Singapore by 2030
- Achieve 42% of women in leadership positions by 2022
- Develop in-house ESG mandates for clients in 2021 for Bank of Singapore
- Continue to integrate ESG into their investments and research process for Bank of Singapore
- Maintain electricity usage in the range of +/- 5 % of 2019’s consumption in 2021
- Maintain 100% inclusion of employees in the Social Engineering Test Programme in 2021
- Maintain No. 1 market share of Child Development Accounts in Singapore in 2021
- Maintain internal E-B score of at least 70% for our Singapore Retail Banking in 2021
- Further bank expansion in Myanmar, Malaysia, Taiwan, Hong Kong, Korea, Japan, and Australia
- Maintain Zero significant case of mis-selling in 2021
- Increase number of individuals helped by 10% in 2021
Sustainable Finance and Future
- Achieved 2022 goal in 2020 of building a sustainable finance portfolio worth SGD 10 billion
- Maintain a balanced gender mix across their workforce in 2021
UN Sustainable Development Goals
UN SDGs Compliance
SDG 3: Good Health and Wellbeing
- funding projects through the #OCBCCares Programme to promote mental wellbeing for less advantaged children, youths, the elderly and individuals with special needs
- Providing a full range of bancassurance products to their customers, in partnership with their subsidiary, Great Eastern Holdings
SDG 7: Affordable and Clean Energy
- Financing a broad range of sustainable energy projects across their markets, including solar farms, wind farms and clean energy technologies
- Integrating ESG considerations into their lending practices and capital market activities
- Retrofitting their buildings to improve energy efficiency and exploring renewable energy use opportunities
SDG 8: Decent Work and Economic Growth
- Providing innovative and relevant financial services to help individuals and businesses of all types and sizes to succeed and achieve their aspirations
- Strengthening existing policies and lending criteria, in particular establishing Responsible Financing policies for the following elevated risk sectors: Energy, Mining and Metals, Agriculture and Forestry
- Creating a work environment that is inclusive and supportive of their employees
- Investing in learning and development to ensure that all their employees have the opportunity to grow
- Contributing to wider economic growth and development by paying salaries, taxes and dividends to shareholders, as well as procuring from local suppliers
SDG 9: Industry, Innovation and Infrastructure
- Financing projects that support the development of sustainable infrastructure and industrial operations
SDG 13: Climate Change
- Financing a broad range of sustainable energy solutions (including renewables), water management and pollution control projects in their markets
- Supporting ground-up projects that raise awareness of sustainability issues and engaging communities to take action through the #OCBCCares Fund for the Environment
OCBC has demonstrated its commitment to aligning its advancements and needs of its stakeholders with ESG factors. The Singaporean multinational bank is transparent with its goals and achievements and clearly notes them through their annually published sustainability reports.
OCBC acknowledges that their alignments with the SDGs are within the spectrum of financial solutions and pay particular attention to SDGs 3, 7, 8, 9 and 13 where they have proven to make sizeable contributions towards helping the achievement of these, noting that these contributions exist within their relevant markets of operation.
Since economic growth and increased infrastructure are relevant to potentially increase OCBCs employee pool and also allows for more room for the bank to increase in size. The bank has proven to meet and even surpass sustainability and green finance targets but again, these targets have been limited in relevance and by the number of SDGs. The inclusion and creation of an ethics committee do however demonstrate the potential for future growth, hence the neutral outlook.
Furthermore, OCBC notes that when achieving a more sustainable future, multinationals must adapt to new changes and advancements.
OCBC does however lack in the number of certificates, labels and listings that it has achieved.
Therefore, OCBC has been listed as a B.
Analyst Outlook: Neutral
OCBC has clearly established a continuous progression towards championing sustainability and this is apparent across financial advancement, employee rights, the prioritisation of customers and its alignment with the SDGs.
However, OCBC could benefit from more certificates and awards, of which they are severely lacking in. While they do acknowledge that the largest impact they have is within the financial sector, demonstrated through their prioritisation of SDGs that directly benefit the bank itself, as a strong bank OCBC should be able to go beyond this narrowed approach.
- To better their own sustainable growth it would be worth looking into and applying for Renewable Energy Certificates within Singapore.
- Could do with more third-party valuation
- Only prioritises five specific SDGs
- Awards are relevant but are lacking in number
- Transparency in their sustainable finance
- Acknowledges that future investments should be in renewable energy