Deutsche Bank launches ESG centre in Singapore after co-founding Net Zero Banking Alliance

Deutsche Bank is setting up an ESG Centre of Excellence (COE) in Singapore, which will focus on execution of ESG transactions, new product development, and advisory services, including sharing of global best practices with Asian regulators and regional bodies such as ASEAN and APEC.

The centre will work across all the business divisions of Deutsche Bank and also help develop fintech products addressing gaps in the ESG market, including impact monitoring, data management, and payments to un-banked communities.

Besides its core activity of ESG transactions across all business divisions, the ESG centre will partner with academic institutions, research, and think tanks, as well as promote policy seminars for sovereign and sub-sovereign governments.

Deutsche Bank Head of ESG for Asia Pacific Kamran Khan, said: “The transition of Asia towards sustainable practices requires ESG transaction models, products, solutions and regulatory measures which meet international standards while supporting on-the-ground realities in Asia. By establishing this ESG Centre of Excellence in Singapore, we aim to set standards for evidence-based, data-driven transactions which can substantiate ESG impact and support sustainable growth.”

Gillian Tan, Assistant Managing Director at Monetary Authority of Singapore, said: “MAS strongly supports the establishment of Deutsche Bank’s Asia Pacific ESG Centre of Excellence in Singapore. It is a welcome addition to Singapore’s growing sustainability and green finance ecosystem. The Centre of Excellence will leverage innovation to accelerate Asia’s transition to a sustainable future. The COE’s goal to facilitate industry knowledge transfer will help to deepen the pool of specialized talent and capabilities in Singapore.”

Alexander von zur Muehlen, Deutsche Bank Asia Pacific, added: “Establishing the ESG Centre of Excellence in Singapore provides a strategic and operational platform for Deutsche Bank to become the premier client-focused ESG bank in Asia Pacific. Our investment in building world-class in-house ESG expertise, complemented by our well-known structuring and placement capabilities, is delivering exponential growth in our ESG business.”

The bank has committed that by 2025 its total volume of sustainable financing and investments will be at least EUR 200bn, and that its operations will be powered entirely by renewable energy sources.

Deutsche Bank has recently co-founded the new Net Zero Banking Alliance to align the operational and attributable emissions from its portfolio with pathways to net-zero carbon by 2050 or sooner.

The bank is also behind the launch of the world’s first green hedge based on a specially designed green hedge framework, Asia’s first FX forward using ESG performance targets, and the first Panda Bond aligned with the UN Sustainable Development Goals.

Setting up the ESG centre in Singapore is no surprise as the country has recently doubled down on its intentions to strengthen the jurisdiction’s standing as a global carbon services and trading hub as well as a major trading and corporate treasury hub.

Several leading names within the industry have recently set up or enhanced infrastructure there as the country develops its FX market to serve the growing trading and hedging needs in the region.

The progressive concentration of big financial players in Singapore is also a response to China’s unwelcomed grip in Hong Kong, which has raised concerns over what may come next.

A number of firms have recently announced the launch or upcoming launches of eFX trading engines in Singapore as part of the initiative by MAS.

Several other large banks have also agreed to develop FX pricing and trading engines in the country, including Goldman Sachs,  JP Morgan, BNP Paribas, BNY Mellon, Deutsche Bank, Barclays, Macquarie, Northern Trust, XTX Markets, Jump Trading, and Nomura.

Co-locating the pricing engine with the trading desk in Singapore provides improved speed and enhanced pricing discovery for regional market participants.

The Monetary Authority of Singapore is continually promoting fintech innovation on ESG matters. The regulator has recently launched an accelerator, where startups must aim to solve at least one of the three key challenges proposed by MAS: (i) Mobilising Capital; (ii) Monitoring Commitment; and (iii) Measuring Impact. Fintechs must submit applications by 11 June 2021.

ESG has become one of the main topics being addressed by governments, regulators, academia, technology providers, and capital markets.

Industry leaders have been increasingly calling for a global framework for ESG investing as the sector faces a massive uptick of inflows and, at the same time, faces accusations of inconsistency in their approach to sustainable impactful investments.

The dramatic increase of inflows into the sector from both retail and institutional investors has shown how important the issue has become nowadays, with an increased focus on healthy ecosystems and sustainability of supply chains.

As the trend is unlikely to slow down in a post-pandemic world and that recent research points to ESG investments outperforming their counterparts, the regulatory landscape must reflect the situation and catch up to this new trend as there remains a lack of consistency in definitions and data.

A global regulatory framework for ESG investing would provide greater protections for those investors who are looking for profits with purpose and will also help to reduce ‘greenwashing’ – when an investment or company gives an inaccurate impression over its green, socially responsible, or corporate credentials.