Green revolving credit facility of $200m secured by Mapletree Logistics Trust

Mapletree Logistics Trust secures S$200 million green revolving credit facility from OCBC Bank

Mapletree Logistics Trust (“MLT”), a leading provider of logistics space in Asia Pacific, has secured its first green loan, a S$200 million green revolving credit facility, from OCBC Bank.

green revolving credit facilityProceeds from this green revolving credit facility will be used to finance the working capital requirements in line with the eligibility criteria of MLT’s newly established Green Loan Framework (“Framework”). The Framework was prepared in line with the relevant international principles and guidelines. Green Bond Principles (“GBP”) 2018 by the International Capital Market Association; Green Loan Principles (“GLP”) 2020 by the Loan Market Association, Asia Pacific Loan Market Association and Loan Syndications and Trading Association.

OCBC Bank is the green loan advisor and sole lender for this green revolving credit facility.

Besides receiving the green revolving credit facility, MLT’s first foray into sustainable finance back in November 2019, was also supported by OCBC Bank through a S$200 million sustainability-linked loan that was designed to incentivise MLT to expand the renewable energy generation capacity for its portfolio.

Ms Elaine Lam, Head of Global Corporate Banking, OCBC Bank, said “We are pleased to be Mapletree Logistics Trust’s trusted partner on their sustainable finance journey. The continued commitment from like-minded corporates like Mapletree Logistics Trust is not just important for sustainable financing’s growth, but also contributes to the larger goal of developing low-carbon, smart cities. This is in line with our goal to promote greener and more sustainable development outcomes that will play a role in mitigating the adverse effects of climate change for the good of future generations.”

Financial institutions have been adopting different frameworks for Green Financing. OCBC announced in December last year that it was launching a framework that gives Singapore SMEs increased access to sustainable financing.
OCBC announced that it has adopted the Equator Principles, an internationally-recognised risk management framework adopted by financial institutions worldwide which will guide how the Bank determines, assesses and manages environmental and social (E&S) risks in projects. This move is part of the Bank’s ongoing push towards responsible financing and builds on its previous commitments to sustainability.

Earlier this year, the Bank announced an ambitious new target of S$25 billion by 2025 for its sustainable finance portfolio after surpassing its initial target of S$10 billion in the first quarter of 2020 – two years ahead of schedule. Notable deals include an A$25 million green loan to ComfortDelGro to finance a hybrid bus fleet in Australia, a S$1.95 billion green club loan to M+S Pte. Ltd. for Marina One, and a sustainability-linked trade facility to support the trade and shipment of 50,000 metric tonnes of sustainably sourced sugar, valued at almost US$16 million.

The Equator Principles (EPs) is recognised internationally as the “gold standard” for E&S Risk Management for infrastructure projects. It establishes a common standard for determining, assessing and managing environmental and social risks in large-scale development projects. The EPs is based on the International Finance Corporation (IFC) Performance Standards published by the World Bank Group and covers a majority of the project finance transactions originating from emerging markets, providing a minimum standard for due diligence and monitoring to support responsible risk decision-making.

OCBC Bank’s voluntary adoption of the EPs is an extension of the Responsible Financing framework which the Bank has put in place since 2017. The existing framework on responsible financing spells out a range of policies and practices to ensure that the financial services provided by the Bank do not adversely impact people, communities or the environment.

As a signatory of the Equator Principles, OCBC Bank will further strengthen its Environmental, Social and Governance (ESG) related disclosure and reporting by disclosing information related to large-scale projects the Bank has financed globally. This will ensure that strict environmental and social standards are applied in line with the international best practices including the IFC Performance Standards during the project development and construction process, including follow-up monitoring.

The Monetary Authority of Singapore said earlier this year that it will better support green finance. Green Finance Industry Taskforce (GFIT), convened by the Monetary Authority of Singapore (MAS), in January issued a proposed taxonomy for Singapore-based financial institutions to identify activities that can be considered green or transitioning towards green. GFIT also launched today a handbook on implementing environmental risk management for asset managers, banks, and insurers.

GFIT comprises representatives from financial institutions, corporates, non-governmental organisations, and financial industry associations. Chaired by HSBC Singapore CEO Mr Tony Cripps, its mandate is to help accelerate the development of green finance through four key initiatives: (i) develop a taxonomy, (ii) enhance environmental risk management practices of financial institutions, (iii) improve disclosures, and (iv) foster green finance solutions.

Consultation on green and transition taxonomy

GFIT has issued a consultation paper setting out a taxonomy for Singapore-based financial institutions to identify and classify activities that can be considered green or in transition. Compared to other taxonomies, a key feature of the proposed taxonomy is that it encompasses transition activities that allow for a progressive shift towards greater sustainability while taking into account starting positions and supporting inclusive economic and social development.

The consultation seeks feedback on GFIT’s recommendations on the environmental objectives, focus sectors, and a “traffic-light” system which sets out how activities can be classified as green, yellow (transition), or red according to their level of alignment with environmental objectives. The taxonomy references international best practices and adapts them to the Asian context where relevant.

The Green Finance Industry Taskforce will develop, in its next phase of work, a combination of principle-based criteria and quantifiable thresholds for activities. This will provide clarity and ease the implementation of the taxonomy by financial institutions.

The public consultation taxonomy document is available on the Association of Banks in Singapore’s website: link . GFIT invites interested parties to submit their comments by 11 March 2021.

Written by Ravi Chandran

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