The latest developments in and around the fields of environmental, social and governance-themed investment and business development.

DBS
DBS has unveiled financing and hedging solutions for emissions trading under the European Union, saying it is the first Southeast Asian bank to do so.

The offerings have been structured by DBS’ emissions reduction business – a unit within the bank’s global financial markets group. They give access to emission allowances used in the European Union’s Emissions Trading System, also known as EU Allowances (EUAs). 

The unit offers capabilities in areas such as financing and hedging.

“As the pace of decarbonisation continues to accelerate, the trading of emission allowances and voluntary carbon credits will grow in importance. They form part of a toolkit of mechanisms to incentivise businesses to reduce their carbon footprints and adopt cleaner technologies,” Jacky Tai, group head of trading and structuring, global financial markets, DBS, said.

The EU’s emissions trading system operates a “cap and trade" model where an annual limit is set for the amount of carbon emissions that can be emitted by energy-intensive industries. This cap reduces every year. Companies that fall within the scheme must have an allowance, or EUA, for every tonne of carbon they emit or face a fine. Companies can buy, trade or receive emission allowances.

In 2024, the system was extended to include shipping emissions from companies outside the EU. Under the scheme, large vessels sailing to and from ports in the union will need allowances to cover half their carbon emissions.

DBS said, citing estimates, that Asian shipowners are projected to spend over €1 billion (S$1.44 billion) annually by 2026 on EU Allowances, with those in Singapore and China expected to pick up the bulk of the tab.