Yet there is a troubling gap between the public commitments made by the biggest Malaysian and Singaporean banks and their lending practices. Singapore’s OCBC, UOB and DBS as well as Malaysia’s Maybank and CIMB have stopped funding new coal power projects for Indonesia’s electricity grid, but money is still flowing to companies building new coal-fired power plants for industry, including nickel and aluminium smelters.
These Southeast Asian banks are enabling one of the fastest-growing coal hotspots in the region. Indonesia’s nickel is critical for electric vehicle batteries and the transition to a cleaner energy future. But nickel smelters are being powered by sprawling coal power plants spewing toxic pollution across neighbouring countries.
Pouring money into coal to power nickel smelters makes little sense. It doesn’t just lack credibility, it reveals the banks’ policy slogans are little more than giant loopholes.
Malaysian and Singaporean banks are backing the Harita Group, a major player in Indonesia’s nickel industry, touting its product as crucial for the green transition. But Harita’s nickel processing is anything but clean. The company relies on coal power, and it is building more of these huge, polluting fossil fuel plants.
Harita Group already has coal-fired industrial power plants producing 890 megawatts (MW) in Obi Island, North Maluku, Indonesia. This company has a total planned power supply of 2.54 gigawatts from 25 coal power plants, according to environmental assessment and permit documents from 2023. The coal power completely overshadows the company’s plans to commission a 300 MW solar panel facility this year.
In 2024, Harita’s total greenhouse gas emissions reached a staggering 10.88 million tonnes of carbon dioxide, equivalent to the emissions of 2.5 million petrol-powered cars driven for one year.
Harita’s Obi Island operations are also linked to severe environmental harms and governance issues. Substances including chromium-6, known to cause respiratory cancers, kidney and liver damage, have been detected in rivers and groundwater adjacent to the Harita operations, according to recent research by the Organised Crime and Corruption Reporting Project and The Gecko Project.
The report alleges that Harita’s senior executives have been aware of this toxic pollution since 2012.
By funding Harita, are the Singaporean and Malaysian banks in breach of their own sustainability policies and commitments to the climate goals of the Paris Agreement?
These big Southeast Asian banks may claim they are financing nickel and aluminium smelters and not the coal power plants. But this is unacceptable. The banks have been adopting coal exit and improved sustainability policies.
So, why are loans for companies like Harita still in place? Because the rules focus on coal projects and coal companies. Harita is a nickel company that uses industrial coal power plants, and it seems the banks are exploiting a dirty great loophole.
Financing companies like Harita undermines the credibility and sustainability commitments of Southeast Asia’s biggest banks. The banks face at least three concrete risks.
Firstly, if “no new coal” only means avoiding loans to coal power plant companies to supply the electricity grid, then a bank faces serious questions on its integrity by financing companies building coal-powered plants for industry.
Secondly, central banks and regulators are requesting that banks assess and classify activities it funds by climate impact and transition risk.
Coal-powered nickel must be assessed as a serious risk, worsening global warming. An Indonesian Presidential Regulation mandates that these industrial coal power plants must reduce emissions by at least 35 per cent within 10 years of operation and can only operate until 2050. Yet Harita has not disclosed how it will meet these obligations.
Thirdly, electric vehicle manufacturers are demanding green nickel and aluminium. Mercedes-Benz has committed to becoming carbon neutral across its entire supply chain by 2039. Samsung says all nickel supplied must be produced with low or zero emissions.
Consumers and investors in all corners of the world are demanding ethical and strict environmental standards, including low-carbon nickel. Producing nickel with coal power will not compete.
The more the world examines the carbon and social footprint of minerals critical for the green transition, the less defensible it is to bankroll coal-powered production.
If Southeast Asian banks are serious about their role in a sustainable future, they must close these loopholes and apply their coal policies to the entire production and value chain of their clients.
Any company which has operations powered by coal must be ineligible for new financing unless it has a credible, time‑bound commitment to switch to clean power.
Singapore and Malaysia’s financial sectors have the tools to get this right. But credibility now hinges on whether no funding for coal means zero finance for this polluting fossil fuel altogether.
Southeast Asia’s biggest banks can set the standard for Asean by drawing a line in the sand and ending support for new industrial coal-power plants.
Binbin Mariana is senior Asia energy finance campaigner, Market Forces, a clean energy finance advocacy organisation working across Asia and Australia.
