MAS debuts grant scheme

SINGAPORE (CNA) – Companies and banks will soon get more support to obtain and develop green and sustainable financing under a new scheme by the Monetary Authority of Singapore (MAS).

The Green and Sustainability-Linked Loan Grant Scheme (GSLS), announced yesterday, will take effect from January 1 next year.

Describing the GSLS as “the first of its kind globally”, MAS said in a media release that it seeks to support companies of all sizes to obtain green and sustainable financing.

MAS will defray up to SGD100,000 of the expenses that companies incur to validate the green and sustainability credentials of a loan.

This includes expenses to engage independent sustainability assessment and advisory service providers to develop green and sustainability frameworks and targets, obtain external reviews and report on the sustainability impact of a loan.

The GSLS also encourages banks to develop green and sustainability-linked loan frameworks to make such financing more accessible to small- and medium-sized enterprises (SMEs), MAS said.

It will defray up to 60 per cent of expenses, capped at SGD120,000, incurred by banks to engage independent sustainability assessment and advisory service providers, obtain external reviews and report on the allocated proceeds of loans originated under the framework.

The amount defrayed increases to 90 per cent of expenses, capped at SGD180,000, for banks’ development of loan frameworks that specifically target SMEs and individuals.

“This is to further encourage banks to provide greater support to SMEs, which are a key driver of economies, and enable individuals to contribute to the sustainability agenda by integrating sustainability considerations in their financing decisions,” MAS said.

With immediate effect, the authority will also expand the scope of its existing Sustainable Bond Grant Scheme (SBGS) to include sustainability-linked bonds.

Beyond existing grant support for pre-issuance costs, the enhanced SBGS will now cover post-issuance costs of engaging independent service providers to obtain external reviews or report for bonds under the scheme, MAS said.

MAS Managing Director Ravi Menon said that loans are a key source of financing across Asia for individuals, SMEs and large corporations.

“There is significant opportunity to encourage firms across different industries to transition to more sustainable practices through green and sustainability-linked loans,” he said.

“MAS’ grants for green loans and bonds are an important part of the green finance ecosystem that Singapore is building – to support Asia’s pivot towards a sustainable future.”

Accompanying the launch of the GSLS, BNP Paribas, OCBC Bank and UOB have introduced loan frameworks that will qualify for the scheme, MAS said.

OCBC’s SME Sustainable Finance Framework will allow firms to access sustainable financing of up to SGD20 million, the bank said in a separate media release yesterday.

The SMEs must be involved in activities across eight “green project” categories including clean transport, renewable energy and green buildings.

“This framework is designed to make it simple for SMEs to access green financing for their businesses and projects, without the complexity and cost of establishing a customised framework for each company,” said OCBC’s head of global commercial banking Linus Goh.

“We believe this will help our SME customers accelerate their sustainability plans – both the SMEs which are enabling the change of industries and businesses as service providers in sustainability-linked efforts such as renewable energy, sustainable water and waste water treatment, as well as SMEs across all industries which are beginning to evaluate and adopt sustainability practices in their businesses, directing investments into green businesses, technology and infrastructure,” he added.