HSBC makes an industry-first move to launch a green loan program with a simplified process aimed to boost small to medium-sized enterprise participation.
A minimum limit of $350,000 will apply based on a newly simplified process that accepts green loan applications from potential borrowers holding industry certifications approved by HSBC.
The certifications include: Singapore Environment Council’s Singapore Green Labelling Scheme (SGLS) and eco-certification schemes; Building and Construction Authority’s Green & Gracious Award, and Green Mark Scheme (GoldPLUS and Platinum); Singapore Green Building Council’s product and services certification schemes; and Green-e’s Renewable Energy Certification. HSBC could look to expand its list of accepted certifications.
In the current environment, corporates typically develop bespoke green frameworks before applying for green loans to demonstrate that their practices with regards to the proceeds are aligned with internationally recognized standards. This could incur human resource and capital costs that are relatively burdensome for SMEs compared to large corporates which can achieve scale in long-term funding from their 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, said HSBC Singapore’s head of business banking Ng Li Lian, 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.