HSBC lends Square Tk 1,000cr in Bangladesh’s first sustainability-linked loan
HSBC Bangladesh has arranged the initial sustainability-linked bank loan in Bangladesh since it lent $118 million (Tk 1,000 crore) to Square Group to progress its renewable strength ambitions.
Under the arrangement, the credit terms of the prevailing working capital facility wanted to Square Group will be associated with renewable energy consumption by the conglomerate.
The deal premiered through a virtual session attended by Tawfiq-e-Elahi Chowdhury, energy adviser to the prime minister; Mohd Humayun Kabir, an executive director of Bangladesh Lender; Tapan Chowdhury, taking care of director of Square Group; Laura Galvin, regional head of international market segments for commercial banking at HSBC Asia-Pacific and Md Mahbub Ur Rahman, ceo of HSBC Bangladesh.
A sustainability-linked loan (SSL) aims to increase the borrower's sustainability account by aligning loan conditions to the borrower's effectiveness against predetermined sustainability functionality target benchmarks.
For case in point, the interest rate beneath the relevant mortgage loan agreement may be reduced if the customer may reach its sustainability targets. Among the targets for Square Group is to avoid carbon emissions as high as 3,000 tonnes each year, regarding to a presentation at the launch.
By linking the mortgage loan conditions to the borrower's sustainability efficiency, borrowers are economically benefited when bettering their sustainability profile over the word of the loan, HSBC Bangladesh said in a good press release.
The proposition will reward Square for bettering their sustainability profile by aligning credit conditions to a set of agreed sustainability performance metrics. If it could accomplish the predetermined renewable strength targets mutually agreed after with HSBC, it'll become eligible for interest reductions for the bank loan.
Square Group, among the signatories of the US Global Small, which encourages businesses global to adopt sustainable and socially responsible guidelines and offer progress reports about implementation, has installed solar panels on factory roofs with the capability to create 2.6 megawatts of electricity.
"This is sole the beginning of a fresh journey because we have the capacity to improve it. I am hoping we will soon increase it to 8 megawatts," Square Group managing director Tapan Chowdhury explained. "Sustainability sits at the main of Square's purpose."
Tawfiq-e-Elahi Chowdhury emphasised on the necessity for energy performance in the backend by method of consuming less water, gas and vitality along with front-end initiatives such as for example solar panels.
"This can help increase the productivity of industries and the sustainability of the earth," he said while calling for the establishment of proper waste products management system found in the united states as well.
Chowdhury also said sustainability might take on a fresh meaning in the content Covid-19 era as there would be a lot even more focus on self-reliance. Creative ways have to be located to use this change to the country's gain.
From the facet of Sustainable Development Goals, this might be an important job, said central bank executive director Mohd Humayun Kabir.
"This is a fresh beginning for both Bangladesh's banking sector and business community -- an important step in creating a more robust, more resilient and sustainable economy," said HSBC Bangladesh CEO Md Mahbub Ur Rahman.
"At HSBC, we happen to be proud to take up our part in structuring the country's first sustainability-linked loan and we'll continue steadily to support the production of Bangladesh's financial market segments.
"I as well want to thank our regulators for their strong leadership and encouragement found in driving a car this important initiative forward.
"HSBC is focused on doing its best to support our consumers and communities. I believe finance includes a very crucial role to play in climate change," he said.
Globally, HSBC possesses commitments to supply $100 billion in financing and investments by 2025 to develop clean energy, technologies with lower-carbon footprints, and other projects that contribute to the delivery of the Paris Climate agreement and the UN Sustainable Development Goals, Laura Galvin said.
This means playing a lead role in the production of financial loans for customers advancing renewable energy and low carbon business activities, in line with the bank.
HSBC Bangladesh aims to greatly help large business groupings align sustainability within their operations and change to a carbon-free universe. It looks to work with all major companies aswell, said the official of the international lender in Dhaka.
Riaz A Choudhury, interim country brain of low cost banking of HSBC Bangladesh, also attended the function.
