OCBC’s ESG-driven financial innovations
OCBC’s ESG Initiatives and Sustainable Global Markets Solutions
As the global financial landscape evolves, environmental, social and governance (ESG) factors have become increasingly critical. Among the industry leaders, OCBC is at the forefront of integrating sustainability into its core operations. By embedding an ESG mindset into its products and decision-making processes, OCBC Global Markets is setting new standards for sustainable financial institutions.
KEY SUSTAINABILITY INNOVATIONS
OCBC has developed a range of sustainability-linked hedging instruments that reward businesses for adopting eco-friendly practices. These tools help companies reduce their environmental impact while ensuring financial growth and risk management.
OCBC offers various hedging products, including Sustainability-linked Interest Rate Swaps, Cross Currency Swaps and Islamic Sustainability-linked Cross Currency Swaps. These products help clients mitigate financial risks while incorporating sustainability performance targets, making them indispensable tools for businesses committed to ESG principles.
In addition to hedging products, OCBC provides wealth products like Green Bonds, Sustainable Bonds, Transition Bonds and Sustainability-linked Structured Deposits. These offerings align clients investments with their sustainability objectives, supporting both environmental and social projects.
CARBON CREDIT LEADERSHIP
OCBC is a pioneer in emissions-linked products, particularly through its active participation in trading of Voluntary Carbon Credits (VCC). The bank facilitates both spot and forward transactions, offering clients bundled carbon credits with Global Markets hedging products.
This integrated approach allows businesses to hedge their financial exposures while advancing their sustainability goals.
OCBC has also established a carbon credit trading desk to facilitate transparent and efficient carbon credit transactions, helping clients offset their emissions.
Several transactions highlight OCBC’s leadership in this space. The bank granted a S$419 million green loan to Frasers Centrepoint Trust, incorporating carbon credits into the financing. Similarly, a S$75 million derivative transaction for OUE REIT, combined interest rate hedging with carbon credits. In Malaysia, OCBC led a RM550 million Shariah-compliant ESG-linked financing for Gamuda, aligning Islamic principles with sustainability goals.
IMPACT ON BUSINESS AND CLIENTS
OCBC understands that every client has unique business needs and goals. The bank tailors strategies to meet both financial and ESG objectives, ensuring that clients thrive in an increasingly sustainability-conscious marketplace. By incorporating sustainability KPIs and emissions offsets into its financial products, OCBC helps clients align financial efficiency with long term environmental goals.
The OCBC Global Markets’ Research and Strategy team provides insights on global and local sustainability trends, including sector-specific innovations like transition bonds and the latest regulatory developments.
SOCIAL IMPACT AND COMMUNITY ENGAGEMENT
OCBC is equally focused on the “social” aspect of ESG. The bank has partnered with First REIT to launch ASEAN’s inaugural Social Bond, demonstrating its commitment to social good. In fact in some of its sustainable hedging strategies, clients receiving subsidies for achieving Sustainability Performance Targets (SPTs) are required to allocate the funds toward a pre-agreed social cause.
LEADERSHIP IN SUSTAINABLE BONDS
OCBC plays a crucial role in the Green, Social, Sustainability and Sustainability-linked (GSSSL) bond market as a lead arranger and market maker. GSSSL bonds directly support sustainability and social projects enabling investors to contribute to climate action and United Nations Sustainable Development Goals (UN SDGs).
OCBC offers a diverse range of GSSSL bond products tailored to client needs. Green Bonds finance environmentally positive impacts, while Social Bonds address social issues like poverty or inequality. Sustainable Bonds meanwhile finance a combination of green and social projects, maximizing the impact of both. Sustainability-linked Bonds tie bond performance to the issuer’s achievement of predetermined sustainability targets. By leading this market, OCBC is shaping a more sustainable finance landscape.
INNOVATIVE DIGITAL SOLUTIONS FOR A SUSTAINABLE FUTURE
As part of its broader ESG mission, OCBC is pioneering digital market and treasury solutions that promote sustainable finance. By focusing on achieving positive environmental outcomes, OCBC empowers businesses to achieve their financial goals while minimizing their environmental impact.
In June 2022, OCBC successfully issued a USD 100 million 3-month Euro-Commercial Paper on Marketnode’s blockchain-enabled bond issuance platform, a venture by SGX Group and Temasek. This digital bond issuance streamlined manual processes, eliminating paper trails and reducing settlement time from five days to two. OCBC acted as the sole dealer for this landmark issuance, the first on the Marketnode platform. The platform, co-developed with OCBC to enhance issuance and post-trade documentation processes, was operationally implemented by Marketnode following an MOU signed in December 2021.
In May 2023, OCBC partnered with Singapore-based digital exchange ADDX to distribute a tokenized equity-linked structured note to accredited investors. The following month, they concluded a second transaction—a tokenized step-up fixed-rate note.
In October 2024, OCBC became the first bank in Singapore to offer intraday institutional lending using blockchain technology. Through J.P. Morgan’s Digital Financing application on the Onyx Digital Assets platform, OCBC conducts reverse repos to maximize returns on excess liquidity. As the first external counterparty with this capability, OCBC lends cash intraday to J.P. Morgan, receiving tokenized securities as collateral. The first reverse repo transaction, with a maturity of under 120 minutes, was completed on 11 October 2024, alongside a repo transaction, both denominated in USD.
In November 2024, OCBC achieved a milestone by successfully issuing its first tokenized bonds on its in-house blockchain platform. The platform streamlines the asset tokenization lifecycle, including creation, minting, ownership transfers, custody, and redemption via token burning. It enables front-office product structurers to “self-mint” tokenized assets, allowing swift customization to meet customer investment needs, offering clients new opportunities to diversify their portfolios with digital assets.
DRIVING POSITIVE MARKET DEVELOPMENT
OCBC’s sustainability vision goes beyond its own operations. By embedding ESG principles into financial practices, OCBC aims to foster a resilient and sustainable economy that benefits businesses, communities and the environment.
The bank has achieved S$64.7 billion in sustainable finance commitments as at 30 September 2024- surpassing its 2025 target of $50 billion.
OCBC has also raised the bar with the launch of its 1.5°C loan initiative and concluding 100 new sustainable finance transactions worth S$14 billion in 2023, demonstrating its leadership in the sustainable finance space.
CONCLUSION
OCBC Global Markets is transforming the financial industry by integrating sustainability into its core operations. With its pioneering sustainability-linked financial products, leadership in carbon markets and innovative digital solutions, OCBC is committed to driving positive environmental and social change. As businesses and communities move toward a sustainable future, OCBC remains a dedicated partner, offering the expertise and tools necessary for success in a greener, more sustainable world
Find out how OCBC Global Markets partners with Corporates & FIs for a sustainable business.