Singapore banks may cut funding or end relationships with clients that breach sustainability rules, adding financial pressure as officials investigate whether Indonesian fires contributed to haze in the city-state.
Mike Ng, OCBC’s group chief sustainability officer, told The Business Times that a confirmed breach of law or the bank’s sustainability standards could lead OCBC to withdraw financing or end a client relationship. UOB told the newspaper it could cut funding, restrict how a loan is used or sever ties with clients that fail to meet its policies.
The Business Times reported that a DBS spokesperson said the bank reviews clients against its sustainability rules and does not tolerate open burning.
UOB’s published financing policy prohibits lending to companies involved in open burning to clear land. A known material environmental, social and governance (ESG) incident calls for an immediate review, with the related risks addressed and managed, the policy says.
Senior Minister K Shanmugam said Oct. 19 that banks had questioned agricultural companies about possible connections to the fires. He said the Monetary Authority of Singapore (MAS) would oversee how lenders manage the resulting environmental and legal risks.
The National Environment Agency (NEA) sent preventive notices to seven Indonesian companies on Oct. 16. It said there were indications that smoke from fires on land within their concessions could have moved to Singapore. NEA announced plans to notify three more companies on Oct. 19 and said it would pursue enforcement against companies found responsible for the haze.
Shanmugam described the haze as preventable and blamed companies’ pursuit of profit. Recalling haze episodes in 2013 and 2015, he said the health effects fall particularly heavily on seniors, young children and people with illnesses.
If companies refuse to cooperate, Singapore could urgently amend existing legislation or introduce new laws to secure further cooperation, Shanmugam said.
