HSBC launches Sustainability Improvement Loan for SMEs
HSBC today announced it has expanded its sustainable finance capabilities in Singapore with the launch of the HSBC Sustainability Improvement Loan. The Bank has also successfully completed its first transaction with Beyonics Pte Ltd, a Singapore headquartered Advanced Precision Engineering and Manufacturing player that develops solutions for the Medical, Automotive and Technology sectors. The proceeds from the facility will support the refinancing of existing debts, working capital requirements and general corporate expenses.
HSBC Sustainability Improvement Loan is structured by linking the interest margin to changes in borrowers’ sustainability assessments and ratings from EcoVadis, one of the world’s largest providers of business sustainability intelligence and ratings. This is designed to incentivise and support businesses of all sizes to accelerate their sustainability transition. EcoVadis evaluates businesses’ performance across four areas: Environment, Labour and Human Rights, Ethics and Sustainable Procurement.
Supporting Singapore’s small businesses and medium-sized enterprises holistic sustainability transition needs
Businesses that utilise the HSBC Sustainability Improvement Loan are required to complete an annual sustainability assessment throughout the duration of the facility. Those with score improvements may benefit from a reduced interest rate. Likewise, the interest rates may increase if the borrowers’ scores decline.
Bridging the sustainable financing gap
Businesses in the early stages of their sustainability journeys often find conventional Sustainability-Linked Loans beyond their reach, primarily due to limited resources for measuring and reporting their ESG performance.
Small and Medium-sized Enterprises (SMEs) contribute more than 40% of Singapore’s greenhouse gas emissions. Yet, only one-third of SMEs have made significant decarbonisation progress, as compared with 80% of larger enterprises1.
The HSBC Sustainability Improvement Loan was developed in response to this challenge. Aimed at small businesses and medium-sized enterprises, this new loan solution links the cost of financing to their sustainability performance.
Ms Priya Kini, Head of Commercial Banking, HSBC Singapore, said “We know that many smaller businesses in Singapore continue to face barriers to decarbonisation compared to the larger enterprises with dedicated resources and a wider range of financing solutions to make the transition.”
Ms Kini added, “The new HSBC Sustainability Improvement Loan aims to bridge the gap by improving businesses’ access to financing solutions, enabling them to take the first step on their net zero transition journey. HSBC is now able to offer a wide range of funding solutions as well as sustainability transition tools to support businesses in Singapore across their corporate lifecycle.”
This new funding solution will further broaden the sustainable finance options in Singapore, supporting the City-State’s ambition to mobilise financing to support the global climate action especially in ASEAN and beyond. Singapore remains the leader and most developed sustainable finance market in ASEAN. In 2022, Singapore accounts for 63% of cumulative ASEAN issuance and is top across the green, sustainability-linked loans (SLL) and sustainability-linked bonds (SLB) segments2.
Supporting local businesses holistic sustainability transition needs
Beyond supporting businesses’ sustainable financing needs, HSBC has also rolled out various initiatives and tools to help corporate customers in Singapore assess their net zero transition risks and formulate plans.
HSBC Singapore business and corporate banking customers can gain free access to its proprietary tool to help them kickstart their sustainability journey. The HSBC Sustainability Tracker helps customers form a basic view of their energy consumption, environmental impact of products and services, and impact of business operations which is the first step to developing a sustainability transition plan.
In addition, HSBC has most recently collaborated with Univers by utilising its proprietary technology platform to enable its customers in Singapore to collect real-time energy and carbon consumption data to optimise and reduce their energy spend and carbon footprint.
To deepen SMEs understanding of how they can transform their businesses for a green future, HSBC Singapore has been providing knowledge support and expertise to the SME Sectoral Net Zero Transition Programme, jointly launched by the Singapore Business Federation and Bain & Company in Oct 20243. The programme provides local businesses with a comprehensive suite of resources, including expert-led workshops, sector-specific training, and a robust support network that includes both financial and non-financial partners.
Besides Singapore, the HSBC Sustainability Improvement Loan is currently available in the United Kingdom, Hong Kong, and the Middle East. It complements the existing range of Green and Social Loans as well as Sustainability Linked Loans offered to Singapore-based businesses to achieve its sustainability goals.
Media enquiries:
Betty Fong | betty.c.y.fong@hsbc.com.sg | +65 6658 4103
Note to Editors:
The Hongkong and Shanghai Banking Corporation Limited
The Hongkong and Shanghai Banking Corporation Limited is the founding member of the HSBC Group. HSBC serves customers worldwide from offices in 60 countries and territories. With assets of US$3,099bn at 30 September 2024, HSBC is one of the world’s largest banking and financial services organisations.
1Bain & Company and Singapore Business Federation launch SME Sectoral Net Zero Transition Programme
2ASEAN Sustainable Finance State of the Market 2022 | Insights | HSBC
3Bain & Company and Singapore Business Federation launch SME Sectoral Net Zero Transition Programme