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OCBC Bank adopts Equator Principles
Voluntary adoption of risk management framework part of push towards responsible financing, says bank
1 Dec 2020 | The Asset

OCBC Bank has adopted the Equator Principles, an internationally-recognized risk management framework to guide financial institutions in determining, assessing and managing environmental and social risks in projects. The Singapore-based bank says the move is part of its ongoing push towards responsible financing and builds on its previous commitments to sustainability.

Earlier this year, the bank announced an ambitious new target of S$25 billion (US$18.7 billion) by 2025 for its sustainable finance portfolio after surpassing its initial target of S$10 billion in the first quarter of 2020, two years ahead of schedule.

Notable deals include an A$25 million (US$18.4 million) green loan to ComfortDelGro to finance a hybrid bus fleet in Australia, a S$1.95 billion green club loan to M+S Pte Ltd for Marina One, and a sustainability-linked trade facility to support the trade and shipment of 50,000 metric tonnes of sustainably sourced sugar, valued at almost US$16 million.

The Equator Principles are recognized internationally as the “gold standard” for environmental and social risk management for infrastructure projects. The framework is based on the International Finance Corporation’s Performance Standards published by the World Bank Group and covers a majority of the project finance transactions originating from emerging markets, providing a minimum standard for due diligence and monitoring to support responsible risk decision-making.

OCBC Bank says its voluntary adoption of the Equator Principles is an extension of the Responsible Financing framework which it has put in place since 2017. The existing framework on responsible financing spells out a range of policies and practices to ensure that the financial services provided by the bank do not adversely impact people, communities or the environment.

As a signatory to the Equator Principles, OCBC Bank says it will further strengthen its environmental, social and governance (ESG) related disclosure and reporting by disclosing information related to large-scale projects it has financed globally. This will ensure that strict environmental and social standards are applied in line with the international best practices including the IFC Performance Standards during the project development and construction process, including follow-up monitoring.

Vincent Choo, OCBC Bank’s group chief risk officer, says: “As we are committed to taking a long-term view on how we create and sustain value for society and the environment, we are constantly improving our approach to responsible and sustainable financing. The adoption of the Equator Principles is another step we are taking towards further strengthening our Responsible Financing policy. We have aligned our efforts internally with the objectives of the Equator Principles – working responsibly with our clients through our business units, across the bank to further strengthen our position as a sustainable bank in the region.”

Choo adds: “Given that infrastructure development is a key economic driver in emerging Asia to sustain growth in the region, the demand in Asian markets to finance large projects such as infrastructure projects to expand transport links and enhance access to basic services such as energy and water has increased significantly. Because of their size, these projects often have a significant effect on the environment and neighbouring communities.”