Singapore's DBS is positioning itself as 'Asia's transition bank'. Shilpa Gulrajani and Chen Xue explain how the bank is helping clients raise sustainable finance to enable the climate transition – while addressing social impact on the way
Environmental Finance: Last year was a challenging one for the sustainable bond market globally. How did the Asia-Pacific (APAC) market navigate those challenges?
Shilpa Gulrajani: Historically, and in contrast to Europe and the Americas, Asia has been a loan-market play in terms of sustainable finance. Sustainable bonds in APAC were driven by strong overall sentiment in the fixed income market and also by the growing maturity of issuers in embracing sustainable finance, as well as the scale of fundraising and some new thematics in the region, as well as the fall in volumes in the sustainability-linked loan market.
This growing maturity has seen corporates better able to define their capex, acquisitions or strategic assets as clearly green, sustainable or transition aligned, enabling labelled issuance.
Chen Xue: APAC has remained very resilient, with sustainable bond volumes either steady or slightly increased, depending on which data you look at. This resilience is partly due to a continued push by policymakers and regulators in the region to support the market, including with guidelines, taxonomies and disclosure requirements. It is also helped by the high number of sovereign issuances, from China, Japan and South Korea in particular, as well as by very robust investor appetite for sustainable debt and demand for good quality labelled bonds from emerging markets.
EF: What about DBS specifically? What trends and developments did you see in your sustainable bonds business during 2025?
SG: Within technology, media and telecommunications, we have seen telcos very clearly embedding sustainability goals into their fundraising. We've seen several sustainable debt issuances related to data centres, addressing their energy efficiency, water efficiency and access to renewable energy.
We've delivered multiple transactions this year linked to data centre sustainability.
We have also seen transactions to fund clean energy which go beyond simply building wind or solar capacity, and which package together renewables with battery storage and investments in grid stability. There's a growing recognition that you can't look at renewables in isolation – instead, thinking about packaging generation assets with overall infrastructure, including storage and grid stability.
The third trend is among financial institutions, particularly in north Asia, raising funding linked to social impact.
CX: A couple of specific transactions we arranged illustrate these themes. Last year, we arranged two green bonds, totalling SGD1.15 billion ($912 million) for data centre operator Equinix to fund its sustainability goals. The March issuance was the first green bond from a foreign corporate issuer in the Singapore dollar market. For these transactions, it was important that we took a deep dive into Equinix's sustainability strategy, how it measured up to its global peers, and into its capex strategy, with a regional context. The issuance and tap were well received by the company and saw strong interest from high-quality bond investors: they were 2-2.5-times oversubscribed and achieved 25-basis point price tightenings.
We also worked with Indonesian bank BRI on its series of two- to five-year social bonds, totalling IDR5 trillion ($298 million). The bond issuance took advantage of the bank's updated social financing framework (which DBS advised on), aligning to the latest international standards and focused on eligible social projects, specifically with respect to financial inclusion and affordable basic services, and economic empowerment. This closely aligns with the bank's micro-lending mandate. In addition, the updated framework also clearly defined target populations, supported by official statistics and measurable metrics, thereby adding credibility to the management of proceeds and reporting.
We are having a lot of conversations with other potential finance sector issuers to explore whether their business models and goals align well with social issuance. There is an increasing understanding among issuers that combining social and environmental aspects can be much more impactful.
EF: The region has an enormous need for transition finance to help more carbon-intensive industries and companies decarbonise. Why has there been so little issuance outside of Japan, and what needs to change to enable that issuance?
SG: Previously, there was limited guidance around identifying and categorising corporate transition efforts, especially in the Asian context. However, this has changed dramatically in the last few years. We have witnessed an evolution in creating alignment around the definition of transition, particularly for the hard-to-abate sectors where transition financing is most required – that includes the Singapore-Asia taxonomy and the ASEAN taxonomy, which lists its 'amber' transition category. Further guidance from bodies such as the International Capital Market Association and the Climate Bonds Initiative helps to boost investor confidence in deals.
A continuing challenge for corporates in Asia is that they often have a limited volume of assets that fall within the amber category – and may struggle to reach the $50 million threshold for bond issuance. So, rather than issue a bond, they tend to tap the loan market for transition projects. As examples, we have arranged loans for hydrogen-ready combined cycle gas turbines, which is a Singapore-Asia Taxonomy-aligned activity, and for sustainable aviation fuel production, which qualifies as an enabler of other sectors' transitions.
EF: What about adaptation and resilience? What potential do you see for related issuance from the region?
SG: DBS aims to be Asia's transition bank, and adaptation and resilience are naturally very much aligned with transition activities. To look at it strategically, adaptation finance is necessary to build resilient businesses over the long run.
Adaptation financing needs are estimated to be at around $200-220 billion per year, of which only about 20% receives funding due to bankability challenges. Government support, together with robust de-risking models and structures involving development finance institutions, can help to attract private capital in the space.
Adaptation and resilience are naturally very much aligned with transition activities – adaptation finance is necessary to build resilient businesses over the long run
In the private sector, companies increasingly recognise that their financial exposures to physical risk are significant and they need to assign an economic value to this risk. This is an emerging area of risk mitigation and we are engaging with a growing number of clients to help them assess physical climate risk.
For example, we are seeing multinational companies that are significant offtakers of agricultural commodities produced in the region investing in agroforestry and drip irrigation to increase the climate resilience of their supply chains. Another example is how data centres sited in water-scarce regions are raising finance to fund water recycling systems, as a forward-looking adaptation play.
CX: The issue is certainly on investors' radar. In our conversations with them, it's become one of the top three topics that they want to hear our thoughts on. We are also seeing physical climate risk potentially impacting sovereign credit ratings. For example, Fitch published a report in February warning that climate risk is set to become a major sovereign ratings driver in the coming years. I think that will create increasing urgency for high-climate-risk markets to raise funds for adaptation infrastructure.
For sure, there are opportunities on the corporate side, and it is inevitable that a growing proportion of labelled bond proceeds will be devoted to making sure issuers are resilient to a variety of climate risks. Beyond this, we may see some specific adaptation labelled bonds in the longer term. However, in the near-term, issuers are more likely to be sovereigns, sub-sovereigns or multilateral development banks.
EF: The Panda bond market – for Renminbi-denominated bonds from non-Chinese issuers – has been growing strongly over the last couple of years. What interest are you seeing among Chinese investors for sustainable Panda bonds?
CX: DBS was recently awarded qualification as a Principal Underwriter for Debt Financing Instruments of Non-Financial Enterprises from the Chinese regulator, enabling us to undertake lead underwriting business for all categories of debt financing instruments in the interbank market. We are the first Southeast Asia-based bank to secure this license and we see a lot of opportunities to support issuers both onshore and offshore in the China inter-bank bond market.
Given the size of the green bond market in China, we look to leverage our experience in Asia to help China's domestic investors access high-quality green projects from offshore issuers.
EF: Generally speaking, what is your approach at DBS to working with issuers?
SG: Sustainable finance is largely commoditised across the banking sector. Our response is client-centricity – ensuring that we put the client at the centre of the value chain. When we assess a client's sustainability profile, we need to understand its transition plans, the technologies it depends on, how they are maturing and the price points at which they make the transition plausible for that company.
We divide our sustainable finance team by sector verticals, so we can continuously enhance our sectoral knowledge and bring value to the client beyond simply talking about a labelled transaction. If we want to be a strategic financing partner with a long-term perspective, we need to better understand our clients, their value chains, their challenges and thereby link advisory and solutions. That resonates with our goal of being Asia's transition bank.
EF: On the other side of the market, how is investors' appetite for labelled bonds from the region evolving?
SG: We are working continuously to match investor demand to the financing needs of issuers. We regularly survey our investor base, and carry out frequent one-on-one interviews with asset managers, insurance companies, asset owners and family offices – DBS has a strong presence in the wealth management sector, with family offices showing keen interest in investments which combine returns and impact.
These conversations provide us with often very granular information – such as an investor specifying, say, that it's looking for emerging market social impact from highly-rated financial institutions. This information helps us to matchmake very precisely.
EF: Finally, what are your expectations for 2026 and beyond? What developments are you watching and where do you see opportunity?
SG: In terms of thematics, as discussed above, we expect to see a growing focus on transition finance, social bonds and adaptation and resilience, as physical climate impacts increasingly affect the real economy.
Geographically, China will continue to generate strong volumes. An important development will be increased issuance from financial institutions in the region, especially in ASEAN countries. As emerging market corporates increasingly make sustainability commitments, and seek capital to meet those commitments, we expect to see financial institutions issuing labelled bonds in order to onward lend to these companies.
CX: We anticipate continuing strong investor demand for labelled bonds – with green bonds particularly likely to remain dominant. We're also expecting a high number of financial institutions from the Middle East coming to issue in the labelled market – we think there's a particular opportunity for them to issue green or social sukuk bonds. And finally, for this year and beyond, we are excited to be working with issuers to address more tailored climate resiliency financing solutions with a focus on social projects.
Shilpa Gulrajani is head of sustainable finance, and Chen Xue is head of credit and ESG advisory, at DBS Bank in Singapore.
For more information, see www.dbs.bank.in/in/corporate/ sustainability/our-sustainability-approach