300 SMEs to get help in new OCBC programme to drive climate action

SINGAPORE – Some 300 small and medium-sized enterprises (SMEs) will get expert help and loans under a new OCBC Bank programme to become more sustainable in their operations and increase their competitive edge, as global supply chains go green.

Launched on Feb 12, the OCBC SME Start-ESG Programme will help small companies stay competitive by meeting sustainability criteria required by larger customers.

It will guide the companies to get the baseline measurement of their sustainability metrics, such as carbon emissions. OCBC is partnering external assessors like EcoVadis and ESGpedia to do this.

The SMEs can then get advice from experts in the programme on how to meet their targets by implementing sustainability practices and how to improve their sustainability performance.

OCBC head of global commercial banking Linus Goh said: “Going green is good for business. Our SME and corporate customers are increasingly stepping up to adopt sustainability methods and financing to future-proof their business.”

As large multinational companies state their net-zero ambitions and decarbonisation targets, the SMEs that are sustainability-ready can stand out and win new business contracts in supply chains, he added.

Under the programme, Enterprise Singapore will over a three-year period support up to 70 per cent of the eligible costs for each SME that does its annual assessment of its sustainability performance.

OCBC can also give SMEs sustainability-linked loans to fund their sustainable practices.

These loans mean that the cost of borrowing is linked to the SME’s sustainability performance, OCBC said. Typically, such loans come with pricing incentives when targets are met.

SMEs can get loans through decarbonisation or by improving their environmental, social and governance (ESG) scores.

Sustainability-linked loans differ from green loans in that they are not tied to specific projects, but are a commitment to improve carbon emissions or ESG scores over a period of time, Mr Goh said.

Green loans are for specific projects – for example, the installation of solar panels.

Mr Goh said that in the early days when the bank was pushing green loans, the conviction among business owners was not very high.

“But with the sustainability-linked loan, it is a different commitment. Most of the business owners take it quite personally. They have ownership of it. They are quite conscious that they are putting their scores up both for their colleagues to see how serious they are about making this work, and to (show) their customers,” he said.

“What we have observed is that it’s critical for SMEs to be forward-looking,” he added, noting that the bank gave 110 sustainability-linked loans to SMEs in 2024, more than four times the number of such loans it gave in 2023.

One of the bank’s sustainability-linked loan recipients was Anywheel, a bicycle-sharing provider.

The company did its first ESG assessment in 2024, after which OCBC provided it with the loan to help it refresh and expand its fleet, with targets to improve its ESG rating year on year.

These efforts build on the OCBC SME Sustainable Finance Framework that the bank launched in 2020 to make accessing sustainable financing simpler and less costly for SMEs.

As at the end of December 2024, the bank has supported about 4,000 SMEs across the region with sustainable financing commitments totalling over $9 billion.

Mr Goh said the bank has also been reaching out to smaller companies along the supply chain that increasingly need to look at their sustainability metrics.

“Even for small companies in transportation and services, logistics and chemicals, that ask (to go green) is already there. In other cases, they anticipate the ask coming because prospective buyers are already sounding them out. So if it’s becoming a factor, then they want to be able to anticipate that,” he said.

He added that for multi-generational businesses, the next generation of business owners can have a different mindset and want to make a change too.

When asked about anti-sustainability sentiments driven by the new Trump administration in the US, Mr Goh said such issues come and go, but companies are still interested in going greener.

“I think what we are seeing with clients is a recognition that, regardless of what the tone of the day is, in the long term, this still remains an issue for the world,” he said.

“If you look at an SME wanting to be relevant, to be viable in their business for the future, they’d rather have the option of being prepared to participate in the changing supply chains that favour green. There’s already enough evidence that in every single industry, it is a factor of consideration.”

In fact, with US President Donald Trump’s tariffs, supply chains and trading patterns can change and be more diversified.

“You may start to see that, in the changing supply chains and trading routes, the ability to play green becomes possibly a more important differentiator,” Mr Goh noted.

Mr Geoffrey Yeo, Enterprise Singapore’s assistant managing director, said: “There is growing recognition that sustainability will increasingly become a key driver for companies’ long-term success.

“The programme will help equip more companies with the essential foundation to get a head start in their sustainability journey, and unlock sustainable financing opportunities for their growth plans.”