- Financing costs tied to EcoVadis ESG performance scores.
- Improved sustainability ratings can reduce loan fees and rates.
- Designed to help businesses begin and grow their green efforts.
HSBC has launched its Sustainability Improvement Loan, a new financing option designed for companies with yearly revenues below $550 million, in Vietnam, following its introduction in 12 markets such as the UK, the Middle East, Hong Kong, and Singapore last year.
The solution is developed to encourage and support eligible businesses in accelerating their sustainability transition, the bank stated in a release on Tuesday.
The loan is established by linking the cost of financing to borrowers' change in sustainability assessments and ratings issued by EcoVadis, one of the largest providers of business sustainability intelligence and ratings. EcoVadis assesses companies based on four areas: environment, labor and human rights, ethics, and sustainable procurement.
While the loans are active, eligible businesses will complete an annual sustainability assessment. Businesses that improve their scores may qualify for lower interest rates/fees, and businesses that decrease their scores may incur higher rates and fees. This framework is intended to encourage businesses to improve their sustainability practices and performance.
Businesses at the beginning of their sustainability efforts frequently discover that traditional sustainable finance is unattainable, mainly because they lack the resources to measure and report their ESG performance effectively. The Sustainability Improvement Loan was created to address this challenge.
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Tim Evans, Chief Executive Officer, HSBC Bank (Vietnam) Ltd., stated, "The launch of our Sustainability Improvement Loan enables HSBC Viet Nam to further build out our sustainable financing capabilities in the country and thereby providing businesses with a variety of financing options that they may need throughout their transition to net zero journeys."
"HSBC Vietnam is committed to developing and enhancing our sustainable financing solutions to support the country in its ambitions to transition to net zero by 2050," he added.
Eligible HSBC customers can access the Sustainability Improvement Loan if they are seeking new financing or wish to refinance current facilities, available through various financing options like revolving credit facilities, term loans, and certain trade finance products.