What You Should Know About Sustainable Finance and Why It is Important

What You Should Know About Sustainable Finance and Why It is Important
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Organisational objectives of businesses have changed, and they operate in ways that help people and the environment apart from making profits to satisfy governments, societies, stakeholders, and others concerned. It makes sustainable economic growth vital for our future other than just a business.

Financial institutions have a significant impact on funding and improving people’s understanding and knowledge of problems related to sustainability by helping organisations that employ ethical and sustainable labour practices or by enabling companies in the research and development of renewable or alternative energy sources. It makes ESG or environmental, social, and governance strategy and sustainable finance key aspects for investors, companies, and customers.

Get to Know What Sustainable Finance Is

Investment decisions should think about including ESG factors for sustainable financing, which will result in making more and more investments in projects and ideas for sustainable development. With it, you can achieve the European Green Deal goals, intended to accelerate the transition to a green economy. You require sustainable industry, technology, and transportation to attain it.

You can find several small and large business enterprises and reputed banks working with non-profit organisations, governments, industries, customers, communities, and associates to address complicated sustainability concerns. For instance, a leading bank, like DBS Bank, is one of the participants of the UN Global Compact, which is dedicated to improving and promoting sustainable development. DBS is known for its notable contributions to Sustainable Development Goals (SDGs) through responsible financing:

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Responsible Banking and Financing

Other than providing specialised retail solutions that are tailored to their needs and assisting them in making effective ESG-based investment decisions, DBS enables its clients to devise business strategies for attaining a smooth transition to low-carbon technologies through responsible banking practices.

Its principles, guidelines and policies direct its actions, efforts, and methods towards sustainable finance while reiterating its commitment to responsible banking practises. The Group Core Credit Risk Policy of the bank includes guidelines and procedures for resolving ESG issues. The Group Responsible Financing Standards and Sector Guides for a huge ESG risk industrial sectors help deal with different ESG issues.

Further, the bank, as a part of its ESG strategy, is instrumental in offering various sustainable finance products like:

  • Sustainability-Linked Loans

These loans are so structured to help borrowers pay variable interest rates by fulfilling numerous pre-established ESG performance goals approved by an autonomous ESG rating or verification agency or organisation. Some notable sustainability-linked transactions include ESG-linked loans, sustainability-linked cross-currency swap and purchase invoice financing, and revolving credit facilities.

  • Sustainable Bonds

Apart from direct financing, DBS helps customers access capital markets to raise money for their social or environmental goals and finance their business operations as they move towards a net-zero future by using ESG bonds.

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ESG bonds can be designed as sustainable bonds, social bonds, sustainable-linked bonds, green bonds, and transition bonds, depending on a company’s sustainability plan and organisational objectives.

With the help of an advisory team of ESG experts, DBS helps you with transactions to meet your company’s unique needs and also makes sure that they meet international standards and best practices, as well as investors’ and other stakeholders’ expectations.

  • Renewable Energy Financing

Loans for clean and renewable energy are designed to finance initiatives like wind, solar, geothermal and hydro. DBS’ Energy Transition Mechanism (ETM) scheme offers blended finance that helps promote green power by shutting down plants generating and using coal-fired power and developing offshore wind resources.

Given the challenges our planet faces, creating long-term value by focusing on environmental ramifications is essential. Sustainable finance helps to reduce risk, lower costs, increase income, attract investment, and improve brand reputation.

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