Singapore-based Sembcorp Marine has secured a sustainability-linked S$500M (US$375M) facility from DBS bank, believed to be the first Singapore Overnight Rate Average (SORA)-based sustainability-linked loan for the offshore and marine industry
The loan features interest rate discounts linked to pre-determined environmental, social and governance (ESG) targets. When these ESG targets are achieved, Sembcorp Marine will enjoy savings in borrowing costs.
Sembcorp Marine group finance director William Goh said “The inclusion of green financing dovetails with our strategic transformation and pivot since 2015 to provide innovative engineering solutions to the global offshore and marine and energy industries, with a keen focus on cleaner, greener and renewable energy solutions. This sustainability-linked financing complements our ongoing efforts to proactively manage the environmental impact of our business.”
In 2019, S$530M (US$394M) worth of Sembcorp Marine’s projects were related to ‘green’ features such as scrubbers, ballast water management system retrofits, and gas and renewable energy projects.
Sembcorp Marine partially replaced its grid-supplied electricity with clean energy harnessed from the solar-roof installed at its steel fabrication facility at its Tuas Boulevard Yard. The company reported that this solar source generated more than 5,000 MWh of electricity and helped the company cut roughly 2100 tonnes of carbon emissions.
To increase its support for businesses seeking to achieve their sustainability goals, DBS has committed to finance S$50Bn (US$37Bn) in renewable, clean-energy and green projects by 2024.
With the impending discontinuation of interest rate benchmarks such as the London Inter-bank Offered Rate (LIBOR) and Swap Offer Rate (SOR), DBS said it is partnering with its clients to achieve a smooth and seamless transition to alternative risk-free benchmark rates. DBS said it has closed more than S$1Bn (US$743M) in loans referencing the risk-free benchmark rates in 2020.
The SORA is a replacement for the SOR recommended by the Association of Banks in Singapore (which represents the interests of banks) and the Singapore Foreign Exchange Market Committee.
Mr Goh added “We are glad to play our part in supporting the transition of the industry benchmark from SOR to SORA. Receiving interest cost savings through meeting our ESG targets is a practical and tangible way by the financial community to acknowledge the efforts and milestones of our sustainability journey.”
The ESG targets in this facility are aligned with Sembcorp Marine’s performance targets set out in the Group’s sustainability report.
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