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ElevandiSep 27, 2023 3:27:56 AM4 min read

What is Good Governance for Sustainability – the G in ESG

Written by Helge Munkel, Chief Sustainability Officer, DBS

Much is said about….

... the importance of purpose - and rightly so. Yet purpose that sits on a page creates no impact. Good governance is needed to translate vision into action.

At DBS, we believe that a strong and efficient governance structure is critical to delivering on a company’s purpose and strategy. 

DBS_Quote 1To drive this commitment at the highest level, we established a Board Sustainability Committee (BSC) in early 2022. The BSC is chaired by DBS Group’s CEO, Piyush Gupta. 

We appointed a new non-executive Director as BSC member in Dr Ben Caldecott, the founding Director of the Oxford Sustainable Finance Group at the University of Oxford Smith School of Enterprise. Additionally, the BSC comprises four other DBS Directors with very diverse and relevant backgrounds across areas such as risk management, reporting and technology.

The BSC has overall responsibility for the formulation of DBS’ sustainability strategy and is guided by the overarching objective to create long term value by managing our business in a balanced and responsible way. The BSC oversees DBS’ overall plans and approves its strategies, goals, and targets in relation to material environmental and social issues, in particular climate-related matters. The BSC meets as and when required, minimally quarterly.

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It was through the guidance of the BSC and senior management that we crystallised our approach to sustainability] – to ensure that “E” and “S” considerations are embedded into the fabric of our business. DBS_Quote 3

This is encapsulated in three sustainability pillars:

1. Responsible Banking that seeks to empower our clients to being more sustainable,

2. Responsible Business Practices that focuses on how we conduct ourselves as an organisation, and

3. Impact Beyond Banking that supports social enterprises and SMEs as well as community causes as well as employee volunteerism.

On an annual basis, we transparently report on our approach and progress in our Sustainability Report (Figure 1).

DBS Table 2Source: DBS: Selected highlights on progress across our 3 sustainability pillars – 2022

To further strengthen oversight and accountability for our sustainability strategy, the BSC is kept informed through regular updates and reports on all material sustainability efforts by the Chief Sustainability Officer (CSO), such as progress on the operationalisation of our net-zero commitments, enhanced sustainability disclosures, new public commitments and policies, among other matters.

Furthermore, the BSC is always presented with a BSC Dashboard, which covers key data on all our sustainability efforts across the aforementioned three pillars that form our sustainability approach.

It is important to note that the BSC is part of a wider governance structure (Figure 2).

DBS Table 1_Source: DBS: Overview of DBS' sustainability governance structure 

The Group Sustainability Council (GSC) is another critical element of the overallDBS_Quote 4 governance architecture, and oversees the execution of sustainability initiatives across the bank and is chaired by the CSO. The GSC comprises senior management members from various business and support units. The GSC meets as and when required, minimally quarterly, and it extends standing invitations to Group Audit, and Legal & Compliance as observers to the meetings, while regularly inviting additional Group Management Committee (‘GMC’) members depending on the meeting agenda. Critically, in consultation with the Group CEO and GMC, the GSC defines the Group’s sustainability related KPIs, sets targets and tracks the performance against these KPIs, which will be reviewed by the BSC.

DBS_Quote 5The GSC serves to coordinate sustainability efforts with Local Sustainability Councils the bank has established in the five core markets outside of Singapore, China, Hong Kong, Taiwan, India and Indonesia. Notably, the GSC serves as an executive forum for discussions and operational decision-making on sustainability matters.

With the above in mind, the role of a Sustainability Advisory Panel or Board Sustainability Committee in an organisation depends on a company’s Purpose, and how this is translated into strategy.

It all comes back to Purpose

For good governance to have impact, it is critical to reflect on Purpose.

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At DBS, being South-East Asia’s largest bank by total assets, we feel that we have a unique responsibility to foster inclusive growth and prosperity, and to enable a fair and just transition that will benefit people across the region in which we operate. DBS started as the Development Bank of Singapore in the 1960s, with the express intent of helping in the industrialisation and development of Singapore. For the longest time, this idea of being sustainable, being relevant to society, doing real things for real people, and therefore having a purpose, has been deeply rooted in our DNA.

Fast forward over 50 years, and we are a very different kind of bank. Over the last decade, we focussed on pervasive innovation and digital transformation to improve our offerings for a better customer experience. DBS has been named the world’s best bank five years in a row since 2018. And while doing all this, we have always maintained our strong sense of Purpose, and developed our new vision which is to be the Best Bank for a Better World, the latter part encapsulating our approach to sustainability.

We foster a corporate culture that supports this vision, which drives our efforts to integrate environmental and social considerations into the fabrics of our business. One of many examples is ‘Our Path to Net Zero’.  And in August this year, we took another major step, when we committed up to SGD1 billion over the next 10 years to step up support for vulnerable communities and catalyse social impact. We also committed to continue pushing up our sleeves and directly support communities via our wonderful People of Purpose volunteering wave, and pledged to contribute over 1.5 million employee volunteer hours.