A set of solutions under a new Transition Finance Framework will enable companies to access financing for their climate transition plans
UOB has launched a set of new solutions for customers in carbon-intensive, fossil fuel-based and hard-to-abate sectors looking to decarbonise.
The Bank’s solutions will finance carbon-intensive companies as they pivot their business models towards more climate friendly activities including projects, technological improvement or equipment that contribute to their overall transition plans and emissions reductions.
The solutions will be under UOB’s new Transition Finance Framework that supports clients on their energy transition journeys. Clients covered in such industries include oil, gas and chemicals; logistics and transportation (marine, land and aviation); fossil fuel-based power generation; and metals and mining.
UOB’s transition finance solutions are tailor-made for these sectors that are unable to access its green financing solutions. Green financing is not readily available to companies in carbonintensive industries and the lack of capital hinders their much-needed shift towards a cleaner future.
Mr Joseph Poh, Head of Oil, Gas & Chemicals at the Sector Solutions Group, UOB, said, “More clients in carbon intensive sectors are telling us that decarbonisation is now at the top of their agenda. Climate change is an existential issue for all of us. Businesses want to do their part and we want to be where they need us most. UOB is here to support, enable and empower them to take steps to a greener future.”
Helping companies transition in four main areas
The Transition Finance Framework is aligned with internationally recognised best practices. The transition finance solutions are designed to assist carbon-intensive companies in their energy transition journeys in four main categories of business activities. These include:
- Operational efficiency
To implement energy efficiency and emission reduction measures via:
- Waste heat recovery
- Co-generation systems
- Flare gas recovery
- Vapour recovery
- Business pivot
- Switching from fossil fuels to low carbon fuels such as biofuels, LNG, hydrogen and ammonia
- Switching from fossil fuel-based energy production to renewable energy production
- Climate change mitigation
- Carbon capture utilisation and storage
- Voluntary carbon credits
- Purchase of carbon credits to offset companies’ residual emissions or support the sale or trade of carbon-neutral products
- Support for the generation of voluntary carbon credits
The Framework has in place strict governance to eliminate greenwashing. Companies must align their climate transition plans to either the Paris Agreement or Nationally Determined Net Zero Targets, such as Singapore’s target of becoming net zero by or around mid-century, as well as Thailand’s 2065 and Indonesia’s 2060 net zero ambitions.
In addition, companies must clearly state performance indicators such as emission reduction methodologies or assumptions, among other metrics, to qualify for transition finance solutions. Companies also have to report their progress towards their environmental goals, such as the annual reduction in greenhouse gas emissions.
Clients adopting these solutions cannot participate in activities that pose critical environmental risks such as air pollution, soil or water pollution and deforestation.
The Transition Finance Framework has received a second party opinion that it is aligned with the International Capital Market Association’s guidelines as outlined in its Climate Transition Finance Handbook.
Apart from the Transition Finance Framework, the Bank’s other sustainable financing frameworks include the UOB Sustainable Finance Framework for Green Building Developers and Owners, the UOB Smart City Sustainable Finance Framework, the UOB Green Financing Framework for Circular Economy and the UOB Green and Sustainable Trade Finance and Working Capital Framework.
For more information on the Transition Finance Framework, please visit uobgroup.com/sustainable-financing.