Fintech expert Jame DiBiasio, a true Sibos Insider, is a resident blogger for Sibos 2021, offering his unique take on this year’s event. This blog is part of a series released daily throughout Sibos week.</em></p> The leaders of HSBC and OCBC used Sibos to discuss their balancing act to help the world reach net-zero carbon emissions.</strong></p> In my blog yesterday, I outlined some big themes for this year’s Sibos, with climate change up top.</p> It seems some of banking’s leading CEOs agree. Noel Quinn of HSBC and Helen Wong of OCBC both addressed this in length during interviews on Sibos’s opening day.</p> I came at this topic feeling a little jaded. This morning’s FT carried the headline: “Big banks resist most direct road map to net zero emissions”.</p> Lenders were cited by the FT as resisting calls to end financing of all new oil, gas and coal exploration projects, as is called for in the upcoming COP26 climate talks to be held in Glasgow.</p> The world’s biggest banks prefer to adhere to targets adopted under the United Nation’s International Panel on Climate Change, which has similar carbon targets but doesn’t ban funding exploration.</p> Quinn didn’t address the question of new exploration directly, but he was forthright about not cutting off relationships with carbon-emitting companies and instead help them transition to carbon-neutral.</p> He says these companies are transitioning to alternative technologies and sources of energy – efforts that need to be financed. “There are technological solutions in development that need to be brought to scale,” he argued. For example, new techniques to engineer aviation fuel can massively reduce the carbon footprint of long-haul flights, but nascent sources lack refining capacity. “We need to make a material impact,” he said.</p> Quinn is optimistic that global industry, in partnership with banks, can move to net carbon neutrality in time to keep the Earth’s average temperature rise within the 1.5 degrees as envisaged in the 2015 Paris Accord – a task that more experts worry is slipping from our collective grasp.</p> “Industries have to replatform their technology base,” Quinn said. “This will require a significant amount of investment…It doesn’t always feel like it, but in my dialogue with clients, I sense we are not beyond our ability to achieve 1.5 degrees. It’s not too late.”</p> The question of exploration projects therefore comes down to what these consist of – are they helping companies create new ways of extracting and using energy, or are they just extending outdated and dangerous practices? This is where data and ESG standards will play a critical role, and it does seem clear that banks will play a leading role in a technological overhaul of just about any industry imaginable.</p> More bank leaders are trying to drive change. Helen Wong, group CEO at OCBC, says the Singapore-based bank has begun to assess environmental risks as it lends. But she acknowledges that green finance too often turns to greenwashing and marketing spin.</p> “You have to start with your own operations,” she said.</p> OCBC is a major property owner in Singapore, with office workers filling its commercial buildings. “We commit to reducing emissions by upgrading systems,” enabling designs such as the efficient use of air conditioning, water-cooling systems, and paper usage. “We’ve stopped giving out water in plastic bottles.”</p> She says the bank’s own activities will reach carbon neutrality “at some point in time.”</p> She says the bank is also piloting a new report on its own lending policies. “This year we will disclose how we emit carbon ourselves, and our lending policies…you can only manage risks that you can measure.”</p> The bank has experimented with ways to foster green finance, noting it has begun structuring “green swaps” with property developers, in which the bank rebates some of the premium if the companies meet certain environmental thresholds.</p> Both HSBC and OCBC see small enterprises as critical to supporting climate transition. Small businesses employ the most people in any economy, and they make up the vast supply chains that support multinationals. As those anchor corporations reengineer their carbon footprints, small and mid-sized businesses will need to respond – and that will require plenty of financing, not to mention innovation in how banks assess risks.</p> It is heartening that Sibos is giving bank CEOs the platform to highlight their commitment to sustainable finance. I hope the forum continues to encourage organisations to live up to their words.</p>