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ESG Investing / Treasury & Capital Markets
Deutsche Bank, Home Credit sign pioneering ESG loan
Philippine consumer financier’s facility includes KPIs linked to expanding credit access to underserved
The Asset 22 Dec 2021

Deutsche Bank and consumer finance provider Home Credit Philippines (Home Credit) have closed an innovative environmental, social and governance (ESG)-linked loan in the Philippines with robust targets related to “S” or social considerations that represent an important step forward in the development of ESG-linked financing.

The short-term loan facility establishes clear metrics and key performance indicators (KPIs) with respect to ESG considerations, as well as concrete targets for those metrics that Home Credit has committed to achieve over the term of the loan.

The primary KPIs focus on expanding credit access to underserved communities in the Philippines, including female and first-time borrowers, and increased provision of financial literacy programmes in the Philippines.

The transaction also features targets around Home Credit’s digitalization efforts, committing them to providing at least 60% of their loans via digital channels, in order to provide a higher level of transparency to customers and enable more equitable loan rates and terms to customers regardless of their economic or social background.

In addition, the KPIs track data to confirm Home Credit’s commitment to protect the data privacy of its customers and ensure that data is only used by Home Credit for agreed purposes. These KPIs will be measured and verified by an independent third-party adviser. The loan complies with the Sustainability-linked Loan Principles of the Asia Pacific Loan Market Association.

“With the KPIs linked to this loan facility, we are even better placed to continue to deliver equitable and transparent access to financial services for the communities in which we operate,” says Jean Lafontaine, group head of funding, treasury, M&A and investor relations at Home Credit.

“This is a pioneering transaction reflecting the transitioning of consumer lending in Asia towards responsible and sustainable lending,” adds Kamran Khan, Deutsche Bank’s head of ESG for Asia-Pacific. “It also evolves the ESG landscape by demonstrating that beyond environmental considerations, financing can also be meaningfully tied to social impact objectives, which in this case are strongly focused on financial inclusion. This is an emerging and important area of ESG, particularly in Asia, where both the need and the opportunity to drive impact are great.”

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