HSBC makes an industry-first move by launching the HSBC SME Green Loan, focused on assisting small and medium enterprises to produce sustainable products with their ‘green' certifications.
The green loan will be issued on a term basis at a minimum limit of $350,000, denominated in either Singapore dollars or US dollars. Applications will be subject to HSBC's usual credit-review process.
The green loan will use the certifications awarded by Singapore industry authorities to certify the sustainability of green projects or assets.
SMEs can't afford the typical costs or time associated with green finance, with management teams already spread thin"
This will be a shift from the current practice by corporates which are reviewed externally based on the Green Finance Frameworks.
"We hear a lot of interest from SME clients in green loans, but we see limited action - this is not for want of trying, but comes down to accessibility," HSBC Singapore's head of business bankingNg Li Liantold the Business Times, highlighting demand from clients with business in electric vehicles, engineering or manufacturing, clean water and recycling sectors.
"SMEs can't afford the typical costs or time associated with green finance, with management teams already spread thin as they focus on the day-to-day running of the business."
HSBC will accept applications to finance eligible green projects from businesses holding the following industry certifications: Singapore Environment Council - Singapore Green Labelling Scheme (SGLS) and eco-certification scheme; Building and Construction Authority - Green & Gracious Award, and Green Mark Scheme (GoldPLUS and Platinum); Singapore Green Building Council - Product and Services certification schemes; and Green-e - Renewable Energy Certification.
The green loan is also available to business banking customers of HSBC Singapore who will be reviewed for qualification.
While green lending has boomed in recent years, with gross global issuance of green loans increasing 30% to $60bn in 2018, green financing has traditionally been used by large corporates due to the deep due diligence associated with the assessment of a loan's use of proceeds. SMEs, on the other hand, struggle with being inaccessible to green finance and loans to support their projects.
With more companies, small and large, incorporating ESG methods into their businesses, green loans are leveraged for boosting sustainability efforts.