The interest will be lowered in tiers if the sustainability target is met.
OCBC will peg the interest rate for firm Wilmar International’s $266.7m (US$200m) loan revolving credit facility for its sustainability performance. According to a press release, the loan is Singapore’s largest sustainability-related bilateral loan funded by a single lender and in collaboration with the borrower on achieving sustainability targets.
Based on the deal between the companies, the loan interest rate will be subsequently reduced through tiered basis if Wilmar meets the pre-set target for the comprehensive environmental, social, and governance (ESG) metrics.
“The prioritisation of ESG performance in the financial sector is an encouraging move in collective action for sustainability,” Wilmar CFO Ho Kiam Kong said.
ESG global provider of research and ratings Sustainalytics is set to assess Wilmar’s performance regarding the target.
The loan will contribute to the country’s sustainability movement for it builds on the Responsible Financing guidelines issued in 2015 by the Association of Banks in Singapore which aim to improve Singapore’s banking sector in terms of sustainable finance, the announcement reported.
“Sustainability is a top priority at Wilmar and we are pleased to be able to demonstrate that responsible business practices will lead to sustainable growth and lower financing costs,” the CFO commented.
“Environmental sustainability is a journey. We want to be joined by as many like-minded partners as possible,” OCBC global corporate banking head Elaine Lam said.
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