Green Lending

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Green Loan

Green Loans reference loans that have characteristics aligned with the four pillars of the Green Loan Principles. The key pillar is that loans are made available to fully or partially finance/re-finance new or existing eligible Green Projects.

What are the Advantages of Entering a Green Loan?

Meet international standards and gain market recognition;
Positive impact on environmental protection and climate change;
Raise corporate image and credibility;
Build deeper and valuable relationship with stakeholders;
Expand new markets and diversify risks from market disruptions due to climate change;
Increase investor willingness and attract new investors interested in social responsible investment;
Meet regulatory and policy requirements;
Increase employee loyalty, especially for those who values SDGs.

Click to Learn Core Components of Green Loan Principles

Use of Proceeds
Green Loan proceeds must be used for Eligible Green Projects
Process for Project Evaluation and Selection
Green Loan lenders should expect a borrower to communicate the environmental sustainability objectives of the financing and the eligibility criteria for the proposed projects
Management of Proceeds
The proceeds of a green loan should be tracked by the borrower in an appropriate manner, so as to maintain transparency and promote the integrity of the product
Reporting
Borrowers should make and keep readily available up to date information on the use of proceeds to be renewed annually until fully drawn, and as necessary thereafter in the event of material developments

Eligible Green Projects, including but not limited to:

Renewable energy - including production, transmission, related installations and products
Pollution prevention and control - including waste gas reduction, greenhouse gas control, and soil remediation
Clean transportation

Green buildings – e.g. energy storage in new and renovated buildings
Waste prevention, reduction and recycling, and waste-to-energy conversion with high energy efficiency/low emissions
Sustainable water and wastewater management

Sustainability Linked Loan

Sustainability Linked Loans (SLL) aim to facilitate and support environmentally and socially sustainable economic activity and growth by linking a borrower’s cost of capital to ESG/sustainability metrics.

What are the Advantages of Entering a Sustainability Linked Loan?

Meet international standards and gain market recognition;
Building stronger, values-based relationships with stakeholders;
Incorporating ESG performance in lender‘s credit assessment;
Showing commitment to achieve corporate social responsibility goals;
Promoting sustainable long term growth and profitability;
Meeting regulatory and policy targets/commitments;
Increase employee loyalty, especially for those who values SDGs

Click to Learn Core Components of Sustainability Linked Loan

Selection of KPIs

The borrower of a SLL should clearly communicate to its lenders the rationale behind the selection of KPIs
The KPIs should be material to the borrower’s core sustainability and business strategy, and address relevant ESG challenges of the industry sector

Calibration of Sustainability Performance Targets (SPTs)

The SPTs should be ambitious and represent a material improvement in the respective KPIs; where possible be compared to a benchmark or an external reference; be consistent with the borrower’s overall sustainability ESG strategy; and be determined on a predefined timeline, set before or concurrently with the origination of the loan
Where possible, make reference to the science behind the SPTs

Loan Characteristics

An economic outcome is linked to whether the selected predefined SPTs are met
The margin under the relevant loan agreement may be reduced when SPTs are met as measured by the pre-determined KPIs or vice versa

Reporting

Provide annual reporting to lenders participating in the loan with up-to-date information to allow them to monitor the performance of the SPTs

Verification

Annually obtain independent and external verification of the performance level against each SPT for each KPI
Once reporting has been completed and external review has taken place, the lenders will evaluate the performance against the SPTs and KPIs based on the information available

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