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Wilmar, Swire Pacific secure sustainability-linked loans
Interest rates pegged to achieving targets based on key performance indicators
15 Sep 2020 | Chito Santiago

Asia’s leading agribusiness group Wilmar International and one of Hong Kong’s leading conglomerates Swire Pacific have secured sustainability-linked loans from Singapore banks to advance their sustainability agenda.

United Overseas Bank (UOB) announced today (September 15) that it is offering Wilmar a two-year US$200 million sustainability-linked loan. In structuring the facility, the bank worked with Wilmar to identify a list of performance indicators in areas including corporate governance, carbon emissions, land use and biodiversity, community relations and supply chain practices.

The performance indicators will help in ensuring that Wilmar’s operations are socially and environmentally responsible, as the company furthers its commitment to meeting the global demand for food without causing a drain on resources. This is especially important given that the global population is expected to increase to close to 10 billion by 2050.

The interest rate on the loan will be pegged to Wilmar’s achievement of the pre-determined targets that have been set based on the list of performance indicators. Sustainalytics, a global independent provider of environmental, social and governance (ESG) research and ratings, will conduct the assessment of whether Wilmar has achieved those targets on an annual basis.

Commenting on the loan, Wilmar CFO Charles Loo says that in building a responsible business, the company believes that the pursuit of its sustainability goals must encompass all aspects of its operations, including seeking sustainable financing solutions at the corporate level. “It is important to Wilmar that we continue to improve our ESG performance as the business grows,” he points out.

Meanwhile, Swire Pacific and DBS have reached an agreement to convert an existing five-year revolving credit facility of HK$2 billion (US$258 million), entered into in January this year, into a sustainability-linked loan. This is Swire Pacific’s first sustainability-linked loan, with the interest rate reducible by reference to indicators of the company’s ESG performance.

DBS has structured the loan to incorporate tiered pricing in order to encourage the achievement of sustainability targets. Swire Pacific will be eligible to receive interest rate savings upon achieving pre-determined targets, which address material ESG issues, such as energy consumption, water usage, and diversity and inclusion, while maintaining its listing on the Dow Jones Sustainability Asia-Pacific Index and improving related key performance indicators.

The proceeds of the loan, announced on September 14, are to be used for general corporate funding purposes, including driving long-term sustainability performance of the company.

Swire Pacific finance director Michelle Low says the sustainability loan underscores the company’s long-standing view of the importance of sustainable development in overall value creation and as a core part of its long-term strategy for success. “It is also a recognition that our strong performance in this area is not simply about compliance or risk management, but also about seeking commercial opportunities and realizing wider business benefits,” she adds.

Sustainability remains a core focus for Swire Pacific and is central to its businesses and the communities in which it operates. The company describes 2019 as another significant year with progress made in several elements of the group’s sustainable development strategy, including outperforming its carbon reduction target by 1.83%, publishing a climate change policy that highlights the importance of future climate risk, and developing its diversity and inclusion strategic framework.

At the operating company level, Swire Properties unveiled a carbon reduction target approved by the Science Based Targets initiative while Swire Coca-Cola announced Hong Kong’s first major plastic waste recycling facility.

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