SINGAPORE - Agri-business player Wilmar International has inked a deal with OCBC bank to peg interest rates on a US$200 million (S$266.7 million) revolving credit facility to the borrower's sustainability performance, the companies said in a joint statement on Friday (June 8) before the market opened.

Interest rates on Wilmar's loan will be reduced on a tiered basis if the company achieves its pre-set sustainability targets, which are based off environmental, social and governance (ESG) metrics. These targets will be assessed annually by Sustainalytics, a global provider of ESG research and ratings.

When contacted by The Business Times, Wilmar was not able to disclose the targets and interest rates. However, a Wilmar spokesman said that some of the sustainability indicators to be used in the assessment include the progress of the company's biodiversity and greenhouse gas reduction programmes, renewable energy use, its freedom of association policy and ESG governance.

The companies said that the move builds on the responsible financing guidelines issued by the Association of Banks in Singapore in 2015 that aim to raise the bar for responsible and sustainable finance.

Elaine Lam, head of global corporate banking at OCBC Bank, said: "We look forward to structuring more of such bespoke financing solutions for them, and for our other customers, as we navigate the business landscape together in a responsible manner."

Wilmar chief financial officer Ho Kiam Kong added: "Sustainability is a top priority at Wilmar and we are pleased to be able to demonstrate that responsible business practices will lead to sustainable growth and lower financing costs."

Wilmar shares finished S$0.01 or 0.3 per cent lower at S$3.27, while OCBC shares ended S$0.04 or 0.3 per cent higher at S$12.84 on Thursday.