CapitaLand snags $500m sustainability-linked loan from UOB

Raffles City Chongqing achieved a Leadership in Energy and Environmental Design (LEED) - Core & Shell, Gold Level Pre-Certification by the US Green Building Council.
Raffles City Chongqing achieved a Leadership in Energy and Environmental Design (LEED) - Core & Shell, Gold Level Pre-Certification by the US Green Building Council.PHOTO: CAPITLAND LIMITED

SINGAPORE - CapitaLand said on Thursday (May 28) it has secured a four-year $500 million sustainability-linked loan from United Overseas Bank (UOB).

It is the largest sustainability-linked bilateral loan in Singapore's real estate sector, said the property group.

In total, CapitaLand and its real estate investment trusts have raised over $2.42 billion in less than two years, through sustainable financing instruments.

Mr Andrew Lim, CapitaLand's group chief financial officer, noted that despite the current economic climate, the group has raised $1.5 billion in 2020 through sustainable finance. It continues to step up its efforts in responsible growth and sustainable finance as they have delivered tangible returns for the group, he added.

In the company's latest Global Sustainability Report, also released on Thursday, CapitaLand said the group has achieved utilities cost avoidance of $208 million since 2009. This is up from the $170 million it reported last year. In 2019, the group's energy and water consumption intensities were reduced by 19.2 per cent and 22.4 per cent respectively from the base year of 2008. CapitaLand also achieved a 29.4 per cent reduction in carbon emissions intensity since 2008.

To date, CapitaLand has partnered with seven financial institutions to secure a total of 12 sustainable financing instruments comprising sustainability-linked loans, green loans and green bond.

The sustainability-linked loan from UOB is explicitly linked to CapitaLand's achievements in the Global Real Estate Sustainability Benchmark (GRESB), an environmental, social and governance (ESG) benchmark for real estate and infrastructure investments across the world. In the GRESB 2019, CapitaLand came in first place across four categories, topping the Global 'Diversified - Listed' category with the highest tier rating of 5 stars.

Given that UOB's sustainability-linked loan is tied to its ESG performance as a group and not any specific project or property, CapitaLand said it has the flexibility to use the loan proceeds for general corporate purposes, unlike green loans where proceeds are specifically used for green projects. In addition, CapitaLand will obtain interest savings as it maintains or improves its rating on the benchmark.

Group chief executive officer Lee Chee Koon said: "The Covid-19 pandemic has raised global awareness of the importance of ESG, as major disruptions to businesses can come from anywhere, including the environment. We are reviewing CapitaLand's sustainability strategy with a view to setting a more ambitious sustainability roadmap, which will allow CapitaLand to better future-proof our company."

UOB's head of corporate banking for Singapore, Mr Leong Yung Chee, said the sustainability-linked loan exemplifies "the collaborative efforts we seek with our clients to help them achieve responsible growth.”