CAPITALAND announced May 28 that it has obtained a S$500 million (US$352.2 million) sustainability-linked loan from United Overseas Bank (UOB). The loan is the largest sustainability-linked bilateral loan in Singapore’s real estate sector.
The four-year loan is the group’s fifth sustainability-linked loan, the highest number of sustainability-linked loans obtained by a real estate company in Singapore. To date, the group has partnered with seven financial institutions to secure a total of 12 sustainable financing instruments comprising sustainability-linked loans, green loans and green bond.
The sustainability-linked loan from UOB is explicitly linked to CapitaLand’s achievements in the Global Real Estate Sustainability Benchmark (GRESB), an environmental, social and governance (ESG) benchmark for real estate and infrastructure investments across the world. In the GRESB 2019, CapitaLand came in first place across four categories and was also the leader in the Global ‘Diversified - Listed' category with the highest tier rating of 5 stars.
Given that the sustainability-linked loan is tied to the ESG performance of CapitaLand as a group and not any specific project or property, it has the flexibility to use the loan proceeds for general corporate purposes, unlike green loans where proceeds are specifically used for green projects. In addition, CapitaLand will obtain interest savings as it maintains or improves its rating on the benchmark.
CapitaLand had achieved interest savings on its existing sustainability-linked loans totalling S$600 million, with Credit Agricole Corporate & Investment Bank, DBS, Natixis Bank and Société Générale. These sustainability-linked loans are explicitly linked to CapitaLand’s ESG efforts to maintain its listing on the Dow Jones Sustainability World Index.
Andrew Lim, group chief financial officer, CapitaLand Group says: "Through the sustainability-linked loans, CapitaLand has been able to capitalize on our achievements in ESG and add resilience to our capital position. Notwithstanding the current economic climate, we have raised S$1.5 billion in 2020 through sustainable finance."
The group, in its 11th Global Sustainability Report released the same day, reported that it has achieved utilities cost avoidance of S$208 million between 2009 and 2019. In the previous year, CapitaLand reported utilities cost avoidance of S$170 million since 2009. In 2019, CapitaLand’s energy and water consumption intensities were reduced by 19.2% and 22.4%, respectively, from the base year of 2008. The group also achieved a 29.4% reduction in carbon emissions intensity since 2008.