Bank of Singapore: A distinctive approach to sustainable investment
The private banking arm of OCBC is demonstrating differentiation and leadership on sustainability in the region.
As the global banking and investment industries continue to apply greater importance and focus on issues of sustainability, some institutions are making clearer progress than others on executing this strategic shift.
Bank of Singapore is one such institution, benefiting from the focus and investment it has made in enhanancing its environmental, social and governance (ESG) investment offering and integrating sustainability into its own operations.
In a video interview, Mike Ng, Group Chief Sustainability Officer, OCBC, and Zubin Dabu, Market Head and Chair of Bank of Singapore's Sustainability Forum, explains the bank’s approach to sustainability and how it is supporting clients invest sustainably.
Going deeper, Dabu shares some more insight on the bank's strategy, recent initiatives and developments, and how it's ecosystem of institutions works and what is bejng achieved.
Q: How do you describe the bank’s strategy on sustainability and sustainable investment? All banks say their approach is different to other banks. So, what is distinctive about Bank of Singapore’s strategy?
Dabu: Our key differentiation is that we are part of the OCBC, the second largest financial services group in Southeast Asia by assets. Being united as “One Group” across the OCBC Group, we are well placed to collaborate with external parties including our clients and various industry stakeholders. We want to exert our influence and extend our capabilities to a broader audience, so that we can, together, make a larger impact.
As a private banking arm of OCBC, we are well positioned to educate and help our high-net-worth clients channel capital flows into sustainable investments and meaningful projects that benefit the environment and society.
We also incorporate ESG factors within our DNA, not just from a sustainable investment perspective, but as part of our culture and the way we operate. This means we look at sustainability holistically rather than exclusively focus on our investment products. For example, as a group we invested of S$30 million over three years since 2021, to launch a suite of sustainability modules to help deepen employees’ understanding in sustainability and how it applies into their roles.
Q: How is Bank of Singapore furthering the sustainability agenda amongst clients/encouraging clients to take up sustainable investing? What else does the bank have in the pipeline?
Dabu: We were the first private bank in Asia to add ESG factors in the assessment of the loan quantum for investment financing for clients in 2021. What this means is that the loan quantum will be raised when the loan is secured by a mutual fund with the best-of-class MSCI ESG Fund Ratings of AAA or AA. Presently, about 20% of mutual funds offered by Bank of Singapore are MSCI-rated AA and above, investing in companies that are leaders in tackling ESG problems and have sustainability at the core of their business strategies.
In 2022, we co-chaired a taskforce under the Association of Banks in Singapore that led to the release of the region’s first sustainable investment guidelines for private banks and wealth managers. We were also very involved with the Private Banking Industry Group, which led to the issuance of recommendations on incorporating sustainability and sustainable investing competencies in private banks front office learning curriculums.
As a private banking arm of OCBC, we are well positioned to educate and help our high-net-worth clients channel capital flows into sustainable investments and meaningful projects that benefit the environment and society
Last year, Bank of Singapore became the first private bank to become a signatory to the Singapore Stewardship Principles for Responsible Investors, underscoring our commitment to sustainable investing. We believe that responsible investment practices can have significant contribution to the development of a more sustainable financial system that benefits the wider community.
We are currently in the process of implementing new ESG assessment tools such as a ESG dashboard, which adds an ESG dimension to clients’ investment portfolio(s) through portfolio ESG ratings and scores, and a client ESG profiling questionnaire. The aim of these new tools is to provide our front office staff access to clients’ portfolio ESG performance data (based on MSCI ESG ratings) and clients’ ESG preferences so as to make better recommendations to the clients on sustainable investment opportunities. It will also serve to help us to develop new ESG products customised to the specific needs of our clients.
As the ESG landscape is rapidly evolving, we will also continue to invest in upskilling and reskilling our workforce. This is to ensure that our employees are suitably equipped with the right sustainability knowledge and skills to help our clients navigate the ongoing climate change transition more effectively and steer them in the right direction to achieve better long-term outcomes.
Q: A key pillar in the bank’s approach is this ecosystem of institutions that it has cultivated to help hit certain sustainability goals and drive greater impact than a single institution could do. Across the three areas of ESG, the bank has formed collaborations within this ecosystem – with the WWF on the environment; with Community Foundation of Singapore on social; and with EY on governance. What do these three collaborations look like in practice? How do they work, and what is being achieved?
Dabu: Private banks play an important role in connecting private capital with innovative ideas that not only generate a strong return for their clients but also drive environmental and social progress. We recognise that collaboration with other like-minded partners is key to achieve greater impact.
In 2021, Bank of Singapore was the first private bank to develop a strategic partnership with Community Foundation of Singapore (CFS), to enable our clients to co-develop with CFS a comprehensive impact driven philanthropic strategy that meets their giving goals, using the deep insights from CFS’s dedicated charities and grants team and philanthropy advisers.
This expertise and insights into Singapore’s charitable landscape will support our clients in mapping out their charitable-giving goals in line with their values and ambitions and with the same careful consideration that goes into any investment.
In the same year, Bank of Singapore became the first bank in Asia to partner WWF (Asia Sustainable Finance Initiative academy) to provide sustainable finance education to its global workforce of over more than 2,200 employees. We have since had multiple engagements with WWF, the latest being a sponsorship of WWF Thirty Hills initiative, a conservation project that supports the restoration of rainforests in Indonesia.
In addition, the bank continues to collaborate with EY on a report series outlining key frameworks and principles of ESG to demystify sustainability and make it more accessible for business owners, investors and philanthropists. We released the third instalment on the topic of carbon credits last year.
We are also focused on growing our ESG ecosystem partnerships across non-profits, consultancies, public sector, and academia. Bringing together different groups offers different perspectives and broad insights and allows us to identify approaches that work for all. There is only so much we can achieve by ourselves – more impactful results can be achieved when we work with others.