Singaporean lender OCBC has extended a S$16 million (US$11.8 million) sustainability-linked loan (SLL) to textile and apparel manufacturer Ghim Li.

The deal employs a streamlined emissions data collection and verification process on the ESGpedia platform developed by fintech firm STACS. The process enables small and medium-sized enterprises (SMEs) to leverage digitalization to get started on their sustainability journeys and makes it easier for banks to extend SLLs to businesses more efficiently.

Global issuance of SLLs has surged in recent years, compared with other debt instruments such as green bonds and loans. The SLL structure, which links loan terms and interest rates to pre-established key performance indicators or sustainability performance targets, offers a mechanism and layer of accountability to drive businesses towards enhancing their environmental, social and governance (ESG) performance.

The latest deal adds to OCBC’s sustainable financing portfolio, which stood at S$47.4 billion as of June 30 2023. It also demonstrates Ghim Li’s commitment to integrate sustainability into its business operations.

“Digitalization is a critical enabler for businesses in their pursuit of sustainability,” says Linus Goh, head of global commercial banking at OCBC. “We believe the shift towards sustainability by SMEs and corporates will accelerate with the increased availability of digital and data-driven tools to support the transition and financing of their businesses.”

Data collected on ESGpedia are independently verified by Bureau Veritas, a provider of testing, inspection and certification services.

The process arose from the ESCAP Sustainable Business Network (ESBN) Asia-Pacific Green Deal for Businesses programme, which was launched on ESGpedia in May 2023. It provides a digitalized and simplified self-assessment tool that helps companies report simplified ESG and operational metrics and provides them an automated calculation of their greenhouse gas (GHG) emissions. 

Ghim Li chief executive officer Felicia Gan says: "ESGpedia helps to simplify the ESG reporting process and allows for an automatic calculation of GHG emissions to provide Ghim Li with greater insights into our current ESG profile, putting us on the same playing field as other industries so that banks have consistent data across a variety of industries and can measure our sustainability performance targets.”