Singapore-based OCBC Bank has launched a financing solution that incentivizes corporates to set and work towards clear carbon emissions reduction targets aligned with internationally recognized, science-based net-zero decarbonization pathways for their sectors.
Under the OCBC 1.5°C loan programme, corporates will get a reduced interest rate on the borrowed amount when the targets are met or exceeded.
The reference pathways, developed by autonomous global organizations, are geared towards achieving a net-zero level of greenhouse gas emissions by 2050 to limit global warming to 1.5⁰C above pre-industrial levels.
While many corporates have already set net-zero goals, these may not be robust or ambitious enough. The goals may not be grounded in the latest research, according to The Net Zero Tracker, a global initiative that assesses global net-zero targets to promote transparency and ambition. Science-backed net-zero pathways based on a 1.5°C scenario are now the baseline that corporates should commit to.
The bank says it has been its longstanding commitment to work with customers to help them get started on their net-zero journeys.
Last October, OCBC Bank joined the Net-Zero Banking Alliance, a global coalition of banks committed to aligning their portfolio with the goals of the Paris agreement. The bank has also been working to support a transition to net-zero carbon emissions for customers in key sectors, including proactively engaging customers on the latest science-backed decarbonization pathways associated with their specific sectors.
As it works with corporates securing the OCBC 1.5°C loan, the bank believes it will gain greater insight into their transition strategies, their progress on the targets they have set, and how they are tracking against industry peers.
These insights will in turn enable the bank to offer the most appropriate advisory and suitable financing solutions to support the corporates’ transition plans. At the same time, OCBC Bank says, it will be able to more accurately assess its own overall “financed emissions” – those associated with its loan portfolio – so as to measure its progress against its own net-zero targets.