1. Sustainability has become the new normal as the world is facing pressing issues like climate  change. 

1.1. The impact of climate change has been felt across many social, economic, environmental  and political systems. 

• Physically, the world has started to experience soaring temperatures, extreme  weather events and rising sea levels, which are expected to worsen in the coming  years. According to the latest climate science, the world will need to reduce carbon  emissions to net zero to meet the 1.5°C target in the Paris Agreement.  
• For that reason, countries have set ambitious climate targets to align with the Paris  Agreement. Last year alone, large economies in Asia, including China, Japan and  Korea, have all made commitments to achieve net-zero.  
• In April this year, Malaysia’s Bank Negara published the Climate Change and  Principle-based Taxonomy (CCPT), with the aim to help financial institutions assess  and categorise economic activities according to the extent to which they meet  climate objectives and promote the transition to a low-carbon economy. 

1.2. As sustainability becomes mainstream, companies are expected to work differently and  assume different responsibilities. Besides the traditional profit-making goals, companies  will be asked to demonstrate their purpose. 

• Investors are paying closer attention to sustainable and responsible investing. Today,  the UN PRI signatories are responsible for over $100 trillion in assets worldwide,  including some of the world’s largest and most influential investors. The message  from global asset managers is clearer than ever -- that the more a company can  show its purpose in delivering value to its customers, employees and communities,  the better it will be able to compete and deliver long-term, sustainable profits for  shareholders. 
• Consumers are also driving changes. According to our ASEAN Consumer Sentiment  Study last year, about half of consumers across the region are keen to support  brands with more sustainable practices1. 

1 UOB ASEAN Consumer Sentiment Study 2020

• Companies of all sizes are getting the message. As the world is searching solutions  to COVID-19, many also realised that responding to COVID-19 and addressing  sustainability issues are not mutually exclusive efforts. The hard work must be done  today in order to prepare for and mitigate the impact of future sustainability crises.  

2. To do this right, companies must go beyond the traditional CSR and integrate sustainability  into their business strategy and planning.  

2.1. At UOB, we are committed to mitigating Environmental, Social and Governance (ESG) risks in our operations and have integrated these considerations into our lending policy.  • ESG risk management is now seen as a hygiene factor for companies that are looking  to tap on the capital market, applicable to both debt and equity.  

• Many global banks, UOB included, have implemented Responsible Financing Policy  that prohibits financing of companies or projects deemed as high risk. For example,  UOB has ceased new financing of coal fired power plant projects and prohibited the  project financing of greenfield thermal coal mines. 
• In order to ensure our financing decisions result in positive impact and mitigate any  potential harm to communities and ecological systems, we align our lending  frameworks and practices to internationally-recognised standards, principles and  guidelines wherever feasible. 

2.2. We are also tapping on new sustainability business opportunities that will last long into  the future. 

• In Southeast Asia alone, there is an estimated $1 trillion of annual economic  opportunities by 2030 as our region moves to a greener economy. As an ASEAN bank,  we are committed to playing our role in the region’s transition towards a sustainable  and climate-resilient economy. Our strategy and decision-making processes in  developing sustainable financing solutions are guided by the UN Sustainable  Development Goals (SDGs). We also provide financing solutions that support the  national sustainability agenda of the countries in which we operate. 
• We initially aimed to build a sustainable finance portfolio of $15 billion by 2023 to  support businesses capturing these opportunities. However, given the amount of  demand driven by the increased focus on sustainability, we have already hit $12  billion in the last quarter and we are on track to meet our target earlier than the  expected timeline.  

2.3. In order to enable businesses gaining access to sustainable finance, we have developed four streamlined and transparent sustainable finance frameworks.

• These frameworks aim to meet the sustainability needs of businesses from various  sectors, including smart city, real estate, circular economy and green trade. By having  pre-defined eligibility criteria and qualifying activities, businesses are now able to  access sustainable financing in a simpler and faster manner.  
• Under these frameworks, we also partner trusted ecosystem players to offer tailored  solutions that simplify our clients’ sustainability journey. A good example is our U Solar programme, which is Asia’s first integrated solar energy platform that connects  solar developers, contractors and equipment manufacturers with businesses and  homeowners for seamless transition to renewable. 
• Since its launch in 2019, the U-Solar programme has facilitated the generation of about 30,000 megawatt hours (MWh) in solar power across ASEAN, including in  Malaysia, Indonesia, Singapore and Thailand. This equates to more than 77,200  tCO2e in greenhouse gas emission reduction, or close to 1.3 million tree seedlings  grown for 10 years or more than 17,000 cars taken off the road for one year.  
• Through our U-Solar programme, we were honoured to be presented the Special  Award – Sustainable Energy Financing (Conventional Financing) by Malaysia’s  Ministry of Energy and Natural Resources at the National Energy Awards 2020.  

3. Apart from renewable energy, circular economy is another area that has demonstrated  strong potential for impact. A circular economy is essential to help address climate change  and other global challenges. 

3.1. The model of a 'linear' economy prevailing today is heavily extractive, resource and  carbon intensive.  

• Today’s efforts to combat climate change have focused mainly on the critical role of  renewable energy and energy-efficiency measures. This is expected to tackle 55 per  cent of global carbon emissions2.  
• However, meeting climate targets will also require tackling the remaining 45 per  cent of emissions associated with production of goods and the management of land3.  These are the harder-to-reduce emissions that arise from the production of buildings,  vehicles, electronics, clothes, food, packaging, and other goods and assets we use  every day. 
• A circular economy approach to products and materials entails keeping them in the  economy as long as possible. This helps to reduce the energy demand and maintain  

2 Ellen MacArthur Foundation, Material Economics, Completing the Picture: how the circular economy tackles  climate change (2019) 

3 Ellen MacArthur Foundation, Material Economics, Completing the Picture: how the circular economy tackles  climate change (2019)

the embodied energy that went into extracting the materials and making the  products. 

3.2. Implementing circular economy can also address other global challenges.  • Countries are facing challenges with the rapid growth of waste volumes and  increasingly complex waste composition due to new and emerging waste streams.  In Southeast Asia, the waste imports from other parts of the world have added the  complexity of the waste issues. For example, Southeast Asian countries account for  5 out of the top 10 countries that contribute to plastic pollution into marine  environment4.  

• Mismanaging waste also has economic implications. Wastage from single-use  plastics alone results in an estimated $80-120 billion worth of material value loss from the global economy each year5.  
• Despite the potential positive impact of circular economy, the world is far from being  circular. It is only 8.6 per cent circular at the moment, and we need to double it to  get on a path to a well below 2-degree world6. 

4. The existing circularity gap offers significant business opportunities for new and better  growth.  

4.1. The transition to a circular economy could generate $4.5 trillion in annual economic  output by 20307, hence it can be a strong value driver for businesses. 

• In order to prevent wastage, businesses have to rethink how products are designed,  made and used to prevent waste. This can lead to new innovation and cost saving  opportunities.  
• The business opportunities arisen from a circular economy are applicable across  different industries. In the near term, industries such as plastics, fashion, and food  are more likely to be impacted or disrupted with the growing pressure from  regulators and consumers. 
• For example, the EU introduced a plastics tax on non-recycled plastic packaging  waste (EUR 0,80 per kg) earlier this year. In Malaysia, the government also launched a roadmap towards zero single-use plastics. Given the increasing regulatory  requirements, many FMCG companies have started to incorporate high degree of  recycled content in their packaging and commit to increase the recyclability of their  

4Jenna Jambeck, Plastic waste inputs from land into the ocean (2015) 

5 Ellen Macarthur Foundation, New Plastics Economy: Rethinking the Future of Plastics (2016) 6 Circularity Gap Reporting Initiative, The Circularity Gap Report 2021 

7 Accenture, Waste to Wealth: Creating Advantage in a Circular Economy (2015)

packaging to 100 per cent. This presents a promising market for businesses across  the entire plastic value chain. 

4.2. We recognize that financial institutions like UOB have a critical role to play in scaling up  financing and accelerating the shift towards circular business models. 

• We are capitalising on this momentum to help accelerate the circular economy  transition in the region. To meet the growing needs of our customers, we have  introduced the Green Financing Framework for Circular Economy to support various  activities that extend useful life of products, including 3Rs (Reduce, Reuse Recycle),  use of circular inputs as well as sharing business models. 
• In order to address green financing needs for both the supply and demand in the  plastic recycling ecosystem, we developed the Plastic Recyclers Ecosystem Financing under this framework. 
• We work closely with plastic recyclers, converters and integrated collectors and  provide them a full suite of products that cover working capital and equipment  financing to increase the supply of recycled plastics. We also offer Buyers Financing  for Plastic Recycling Ecosystem Solution for end-use companies that consume recycled plastics. Through the solution, we aim to offload their CAPEX requirements  and tight working capital to promote the adoption of recycled plastics.  
• UOB Malaysia has also been working closely with the Malaysian Plastic  Manufacturers Association (MPMA) since 2016 to build awareness and help 700  business members who are plastic recyclers to gain access to our sustainable  financing.  

5. Beyond sustainable financing for our corporate clients, we have also integrated  sustainability into our other parts of business and operations.  

• For example, we recently launched the UOB EVOL card to serve the needs of Gen Z  consumers who are sustainability oriented across ASEAN. The UOB EVOL card is  Southeast Asia's first bio-sourced credit card, created from renewable sources that are safe for incineration. In line with the card design, it supports and encourages green initiatives such as auto-enrolment of e-statements and sustainable deals. 
• We also recognize that ensuring responsible investment practices is part of our fiduciary duty to our customers. We believe that the integration of ESG considerations into our investment processes is important from a risk management  perspective and to ensure long-term returns. Therefore, we have put in place a  structured due diligence framework and integrated ESG considerations into our  investment products. We also offer a range of ESG-focused products, such as UOB  Asset Management’s United Sustainable Credit Income Fund, as well as private equity impact funds such as UOB Venture Management’s Asia Impact Investment  Fund to meet the growing demand for sustainable investments. 

• Where our internal operations are concerned, we are cognisant of the direct  environmental impact resulting from our network of over 500 branches and offices.  As a start, we aim to achieve green building certification for all key wholly-owned  UOB buildings, while we are exploring more ambitious direct footprint targets.  

6. Conclusion  

• We recognise that sustainability is a journey that starts with progressive steps. Our financing and investment frameworks and solutions mark the start of our  commitment to support our clients’ transformation and transition pathways.  
• Moving forward, we will continue building our capabilities and identifying ways to  support our partners and clients to transit to a sustainable and circular economy. We  will also strive to make sustainability accessible to all to contribute to the economic,  social and environmental well-being of the region. 
•  I hereby encourage all of you to join the journey. Together, we can forge a  sustainable future.

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