UOB rolls out sustainable finance framework for companies

BNP Paribas and OCBC Bank are also introducing green and sustainability-linked loan frameworks, with the support of the Monetary Authority of Singapore.

Singapore-based United Overseas Bank (UOB) has launched the “UOB Smart City Sustainable Finance Framework”, a dedicated framework to make sustainable financing more accessible to companies contributing to the creation of smart cities, according to a statement from the bank.

The framework is supported through the Monetary Authority of Singapore’s (MAS) Green and Sustainability-Linked Loan Grant Scheme (GSLS).

The grant covers expenses incurred by banks to engage independent sustainability assessment and advisory service providers to develop frameworks, obtain external reviews and report on the allocated proceeds of loans originated under the framework, according to a statement from the MAS. Besides UOB, BNP Paribas and OCBC Bank are also introducing green and sustainability-linked loan frameworks under the scheme, the regulator said.

UOB’s framework sets out the criteria the bank’s corporate and institutional clients must meet when accessing a range of products, from green or sustainability-linked loans and trade finance facilities to other sustainable banking products, according to the statement.

These criteria include requiring the company to have a clear sustainability strategy and objectives, to achieve their sustainability performance targets and to use the proceeds to further their sustainability agenda.

Under the framework, businesses must also be able to demonstrate how their activities promote a better quality of life for residents through the use of renewable energy, green building construction, improved energy efficiency, green transportation, sustainable water and waste management and climate change adaption.

UOB will monitor the company’s management of loan proceeds and the environmental and social impact of its business activities on an annual basis.

With the framework, companies committed to building sustainable and smart cities can apply for sustainable financing without having to develop their own financing framework, which can take time and resources.

Climate and environment-related advisory and consultancy firm Carbon Trust provided a second party opinion on the bank’s framework in accordance with the Green Loan Principles and the Sustainability Linked Loan Principles issued by the Loan Market Association, the bank noted.

The new Smart City Sustainable Finance Framework is an expansion of UOB’s Green Infrastructure Financing Framework, which the bank launched last year to provide sustainable financing to companies in the infrastructure sector. UOB also has a sustainable finance framework for real estate that guides the financing that it provides to its clients in support of sustainable buildings.