HSBC Singapore has introduced a new loan product designed to help small and medium-sized enterprises (SMEs) improve their sustainability performance.
The HSBC Sustainability Improvement Loan links the interest rate on the loan to the borrower’s sustainability rating, as assessed by EcoVadis.
This encourages businesses to improve their environmental, social, and governance (ESG) practices by offering lower interest rates for better sustainability scores.
Conversely, interest rates may increase if a borrower’s sustainability score declines.
EcoVadis evaluates businesses’ performance across four key areas: Environment, Labor & Human Rights, Ethics, and Sustainable Procurement.
The loan is designed to be accessible to businesses in the early stages of their sustainability journey.
It addresses the challenge that many SMEs face in accessing traditional sustainability-linked loans due to limited resources for measuring and reporting ESG performance.
HSBC has also launched several other initiatives to support businesses’ sustainability transitions.
This includes the HSBC Sustainability Tracker, a free online tool to help them assess their environmental impact and a collaboration with Univers to provide real-time energy and carbon consumption data.
To further assist SMEs, HSBC provides knowledge support and expertise to the SME Sectoral Net Zero Transition Programme, which offers workshops, training, and a network of support for businesses.
The loan is also available in the United Kingdom, Hong Kong, and the Middle East.
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. 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.”
Featured image credit: Edited from Freepik
