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SINGAPORE: Businesses and banks will soon receive more support to obtain and develop green and sustainable financing under a new scheme from the Monetary Authority of Singapore (MAS).
The Green and Linked to Sustainability (GSLS) Grant Program, announced on Tuesday (November 24), will go into effect on January 1 of next year.
Describing the GSLS as “the first of its kind globally,” MAS said in a press release that it seeks to support companies of all sizes in obtaining green and sustainable financing.
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Under the scheme, MAS will defray up to S $ 100,000 of expenses incurred by companies to validate the green and sustainability credentials of a loan.
This includes expenses to engage independent sustainability assessment and advisory service providers to develop sustainability and green goals and frameworks, obtain external reviews, and report on the sustainability impact of a loan.
The GSLS also encourages banks to develop green and sustainability-linked credit frameworks to make such financing more accessible to small and medium-sized enterprises (SMEs), MAS said.
Pay up to 60 per cent of expenses, capped at S $ 120,000, incurred by banks to engage independent providers of sustainability assessment and advisory services, obtain external reviews and report on allocated loan resources originated in the frame.
The amount borne increases to 90 per cent of expenditures, capped at S $ 180,000, for the development of loan frameworks by banks that specifically target SMEs and individuals.
“This is to further encourage banks to provide greater support to SMEs, which are a key driver of economies, and to allow people to contribute to the sustainability agenda by integrating sustainability considerations into their financing decisions.” said MAS.
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Effective immediately, the authority will also expand the scope of its existing Sustainable Bond Grant Program (SBGS) to include bonds linked to sustainability.
Beyond existing grant support for pre-issuance costs, the enhanced SBGS will now cover the post-issuance costs of hiring independent service providers to obtain external reviews or bond reports under the scheme, MAS said.
Ravi Menon, managing director of MAS, said that loans are a key source of financing in Asia for individuals, SMEs and large corporations.
“So there is a great opportunity to encourage companies in different industries to transition to more sustainable practices through green and sustainability-linked loans,” he said.
“MAS grants for green loans and bonds are an important part of the green finance ecosystem that Singapore is building, to support Asia’s shift to a sustainable future.”
BANKS LAUNCH GREEN AND SUSTAINABLE LOAN FRAMES
Along with the launch of the GSLS, BNP Paribas, OCBC Bank and UOB have introduced credit frameworks that will qualify for the scheme, MAS said.
OCBC’s Sustainable Financing Framework for SMEs will allow companies to access sustainable financing of up to S $ 20 million, the bank said in a separate press release on Tuesday.
SMEs are required to participate in activities from eight categories of “green projects”, including clean transport, renewable energy and green buildings.
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“This framework is designed to simplify SMBs’ access to green financing for their businesses and projects, without the complexity and cost of establishing a custom framework for each company,” said Linus Goh, director of global commercial banking at OCBC.
“We believe this will help our SME clients accelerate their sustainability plans, both SMEs that are enabling industry and business change, and service providers in sustainability-related efforts such as renewable energy, sustainable treatment of water and wastewater, as well as SMEs in all industries that are beginning to evaluate and adopt sustainability practices in their businesses, directing investments towards green businesses, technology and infrastructure, “he added.
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The UOB has also launched a Smart Cities Sustainable Financing Framework to make sustainable financing more accessible for companies contributing to the creation of smart cities, the bank said in a press release.
Companies must be able to demonstrate that their activities promote a better quality of life for residents through the use of renewable energy, green building construction, improved energy efficiency, green transportation, sustainable water and waste management and adaptation to climate change, the bank said.
“The United Nations estimates that it takes $ 2.5 trillion annually for developing countries to fill the financial gap to achieve the (Sustainable Development Goals) by 2030,” said Frederick Chin, director of banking and wholesale markets for the group. of the UOB.
“Financial institutions can and should play a role, together with governments and businesses, in helping channel more funds towards sustainable development. These efforts will go a long way toward making Asian cities more sustainable and livable.”
