Sustainable Finance

HSBC aspires to be a leader in financing, managing and shaping the transition to a low-carbon world.

From sustainability to business growth

At HSBC, sustainability means building businesses for the long term, forging growth and fostering sustainable development. We are committed to partnering with clients in the transition to a low-carbon economy for a sustainable future.

Sustainable finance

HSBC recognises the important role that finance has to play in creating sustainable growth, being named the “World’s Best Bank for Sustainable Finance” in the Euromoney Awards for Excellence 2019.

We are here to help businesses advance towards a sustainable economy by providing financing support based on integration of environmental, social and governance (ESG) criteria, to support the United Nations Sustainable Development Goals (SDGs) and to combat climate change.

Sustainability Linked Loan - First of its kind in Bangladesh

HSBC Bangladesh has launched Sustainability Linked Loan, an innovative financing structure and the first of its kind in Bangladesh, helping the country to take an important step towards a more sustainable future.

This is a new beginning for both Bangladesh’s banking sector and business community – an important step in creating a stronger, more resilient and sustainable economy. At HSBC we are proud to play our part in structuring the country’s first sustainability-linked loan and we will continue to support the development of Bangladesh’s financial markets. I also want to thank our regulators for their strong leadership and encouragement in driving this important initiative forward.

Md. Mahbub ur Rahman Chief Executive Officer, HSBC Bangladesh

Sustainability Linked Loan aims to facilitate and support environmentally and socially sustainable economic activities and growth by linking a borrower’s cost of capital to Environmental, Social and Governance/ sustainability metrics. The metrics can be any activity that supports the 17 sustainable development goals set by the United Nation to be achieved by 2030 to protect the planet, end poverty and ensure peace and prosperity.

We have partnered with Square Group, one of the pioneer signatories of United Nations Global Compact (UNGC) to arrange the very first Sustainability Linked Loan in Bangladesh. Under this arrangement, the credit terms of the existing working capital facility offered to Square Group will be linked to renewable energy usage. Square Group will become eligible for preferential interest rate when they achieve renewable energy usage goals.

 

Photo of solar panels placed in Square Textiles to increase their renewable energy usage

Square Group and HSBC have always pioneered positive change to their industries. Sustainability sits at the core of Square’s purpose and is dear to my heart. We are delighted to see Square to be the first Bangladeshi organization to avail Sustainability Linked Loan and we look forward to every success of this project aiming to build a sustainable world for our future generations.

Tapan Chowdhury, Managing Director, Square Group

How does Sustainability Linked Loan (SLL) work?

Sustainability Linked Loan provides financial support and recognition to clients investing in environmentally and sustainable way of doing business by aligning credit terms to the borrower’s performance against a set of agreed sustainability performance metrics.

1. Setting the Sustainability Performance Targets

The Sustainability Performance Targets (SPTs) can be any activity that supports the SDGs (17 sustainable development goals set by the United Nation to be achieved by 2030 to protect the planet, end poverty and ensure peace and prosperity). Some example of potential KPIs are: Energy efficiency improvements, Water usage improvement, Affordable Housing.

2. Sustainability Linked Loan with pre-agreed SPTs

- The SPTs are linked to the terms of credit facilities that has been offered/provided to borrower. Upon achieving the pre-determined Sustainability Performance Targets (SPTs), the borrower will enjoy a preferential credit term under SLL.

3. Annual review

An annual review will be conducted for the tenure of SLL to see if the applicant meets the SPTs or not and credit terms are adjusted accordingly by the predetermined SPT.

We are really pleased to have the opportunity to introduce Sustainability Linked Loan for our clients in Bangladesh and specially delighted to execute the first transaction with Square Group. I look forward to seeing Sustainable Finance flourish with our customers who have always embraced innovative solutions.

Riaz A Choudhury Country Head of Wholesale Banking (Interim), HSBC Bangladesh

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