India must embrace ‘transition finance’ in a big way, says DBS Group Honcho Muenkel

Singapore-headquartered DBS Group is keen to do more ’transition finance’ and is currently in talks with several steel, cement and mobility companies in India to encourage the adoption of such financing facility, its Chief Sustainability Officer Helge Muenkel said.  

“DBS Bank wants to do more transition finance in India. We want to go to companies and help them transform businesses from being brown to green,” Muenkel, who is in India at the invitation of Reserve Bank of India (RBI) for a capacity building workshop on climate finance, told businessline in an interview. 

Muenkel said that India must look to embrace ‘transition finance’ as it would bring more capital into the country. There has to be a framework by the RBI on this front even as there is still no global consensus on exact definition of  ‘transition finance’, he noted.

“World has come together and agreed on what is green. However world has not come together to agree on what is transition and what is a credible definition for this. Singapore has a taxonomy to define what is transition. But world has not done this as yet. We want to tell the world that we want to do more transition finance. We are willing to discuss this with our customers. We will work with policymakers to define this as a system. We want to foster a collective approach. We can do more capital through transition. India needs capital for transition, we must not focus only on green stuff,” he said.

Transition Finance vs Sustainability Finance 

Transition finance and sustainability finance, both aim to support environmental and social goals, but they differ in scope and purpose. Put simply, transition finance supports industries and companies that are high-carbon or not yet sustainable, but are actively working to reduce their emissions and shift toward greener operations. It helps sectors like steel, cement, and oil & gas decarbonise through cleaner technologies and improved efficiency. Transition finance includes instruments like sustainability-linked bonds and transition bonds.

On the other hand, sustainability finance encompasses broader financing for projects and activities that contribute to environmental and social sustainability from the outset. It includes green finance (for renewable energy, EVs, etc.) and social finance (for affordable housing, healthcare, etc.) and It includes instruments like green bonds, social bonds, and sustainability bonds.

Essentially, transition finance helps high-emission sectors move toward sustainability, while sustainability finance funds already sustainable or socially responsible activities.

Trump effect 

When asked about US President Trump’s recent executive actions aimed at rolling back climate policies, Muenkel acknowledged the challenges they pose but noted a nuanced impact. “We cannot ignore the actions of the US—they have created a challenging environment. However, not everything they do is entirely negative for climate action. Some measures have also had a positive effect on certain technologies,” he said.

“The world is so inter-connected. If the largest economy in the world does something material, it affects all of us. There is no second guessing. We cannot simply say the rest can manage. All of us have to analyse this. We need to be mindful and realistic this has an impact”.