Launch of MAS Green and Sustainability-linked Loan Grant Scheme

Singapore has taken a further step in driving critical mass in sustainable finance, supporting corporates and Financial Institutions in their sustainability endeavours, according to HSBC. The comments follow the launch of a grant scheme to support green and sustainability-linked loans – first of its kind globally – announced by the Monetary Authority of Singapore (MAS).²

The provision of finance is a key driver in creating sustainable societies and future-proofing economies. Whilst green finance has accelerated at pace in recent years, with ASEAN issuance almost doubling in 2019 to USD13.4bn.³ Yet there is still a void when it comes to the use of dedicated sustainable finance by mainstream business and society.

Frances Chen, Head of Corporate Sustainability, HSBC Singapore said: “The costs associated with issuing green loans have meant that they have typically remained the preserve of large corporates. The GSLS will support financial institutions’ endeavours in developing verified sustainable financing frameworks catered to SMEs, thereby allowing FIs to better support SMEs.”

Effective as of 1 January 2021, GSLS comprises two tracks⁴:

• Track A: support corporates of all sizes to obtain green and sustainability-linked loans
• MAS will defray up to SGD 100,000 of qualified expenses per loan (min loan size SGD 20m, min loan tenure of 3 years)
• Track B: support banks to develop general green and sustainability-linked loan frameworks or frameworks targeted at SMEs or individuals
• General frameworks: MAS will defray up to 60% of qualified expenses, capped at SGD 120,000 per framework over 3 years
• Frameworks targets at SMEs and individuals: MAS will defray up to 90% of qualified expenses, capped at SGD 180,000 per framework over 3 years

According to HSBC, the benefits will be wide-ranging and include:

• opening up sustainable finance to smaller corporate players;
• providing greater ease of access
• ensuring transparency and accountability of how the funding is utilised;
• and encouraging best practices amongst financial institutions.

Ms. Chen continued: “It’s great to see MAS taking the lead to widen the availability of sustainable finance through this scheme. The move further cements the Republic’s commitment to sustainability. Looking ahead, schemes like the GSLS will form a crucial part in supporting that ambition and we are proactively looking into how this can be leveraged.”

HSBC recently set out an ambitious plan to prioritise financing and investment that supports the transition to a net zero global economy – and helps to build a thriving, resilient future for society and businesses. At the heart of the plan is a pledge to reduce financed emissions from our portfolio of customers to net zero by 2050 or sooner, in line with the goals of the Paris Agreement.⁵

In Singapore, HSBC has delivered a total of USD1.2 billion of sustainable financing and investment as of end of 2019.