Sustainable financing at OCBC has been unfettered by the broader coronavirus headwinds and has, in fact, accelerated year-to-date.
OCBC's head of structured finance and sustainable finance Mike Ng said the Singapore lender had completed about 20 sustainable loan deals year-to-date.
«[This is] quite a bit further ahead compared to this time last year,» Ng said in a «Business Times» report (behind paywall), adding that the bank completed over 20 such deals in 2019. «We have been quite busy despite the current economic situation, which is actually really positive.»
The comments follow the bank’s recent commitment to increase its sustainable finance target to S$25 billion ($17.9 billion) by 2025 after reaching the previous goal of S$10 billion ($7.2 billion) by 2022 two years early.
Sustainable Flavor
According to Ng, many of the transactions executed in 2020 were from repeat customers, suggesting that numerous firms have permanently incorporated sustainability into their business models.
And though often heavily focused on climate change, Ng observed increasing awareness about illegal wildlife trading due to the resilience of biodiversity against virus outbreaks or inequality and access to healthcare, highlighting the crowded living conditions of migrant workers at home.
«When people talk about sustainability, it's very much focused on climate change,» Ng explained. «But I think with Covid-19, generally we get exposed to some of the crack lines in our systems.»
Regulatory Ease
Thus far, most of OCBC’s sustainable transactions are from the property sector where Ng said executing deals is «very easy» due to limited ambiguity about whether a deal is green or not. This is due to regulatory support in the form of a «Building Construction Authority Green Mark» certification.
Ng also highlighted that such assets tend to be bankable compared to other alternatives such as research and development facilities for renewables, which are sufficiently green but lack a proven business model.
Renewable Future
Still, Ng is bullish on renewables as funding diminishes for coal-fired power plants, predicting a significant shift in the economics of energy consumption in the future.
«Technology is constantly improving and renewable energy has become competitive with the traditional fossil fuel plants,» Ng explained. «So it's quite likely in the years to come, it will cost more to burn coal than to generate electricity from renewable sources.»
According to the International Finance Corporation, emerging market climate investment opportunities have an estimated size of about $23 trillion between 2016 and 2030. Separately, DBS and the United Nations jointly estimated the size of the ASEAN green finance opportunity to be at least $3 trillion.
