Reply to Parliamentary Question on measures to target SME awareness and accessibility under the Green and Sustainability-Linked Loan Grant Scheme
QUESTION NO 333
NOTICE PAPER 195 OF 2020
FOR WRITTEN ANSWER
Date: For Parliament Sitting on 4 January 2021
Name and Constituency of Member of Parliament
Ms He Ting Ru, MP, Aljunied GRC
To ask the Prime Minister what specific measures will be implemented to target SME awareness and accessibility for the planned Green and Sustainability-Linked Loan Grant Schemes which will be rolled out in 2021.
Answer by Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:
1. MAS’ Green and Sustainability-Linked Loan Grant Scheme (GSLS) aims to support companies of all sizes, including SMEsGreen loans are loans whose proceeds can only be used for green equipment or projects. Sustainability-linked loans do not restrict use of proceeds; instead, borrowers commit to sustainability performance targets, and are awarded a reduction in the loan interest rate if their sustainability targets are met..
2. MAS will defray up to $100,000 of the expenses incurred by borrowers in engaging independent service providers to verify the green and sustainability credentials of such loans.
3. While the GSLS supports the adoption of such loans, MAS recognises that the cost, time and effort of procuring the necessary sustainability advisory and assessment services may not be commensurate with the loan quantum, particularly for smaller SMEs. The GSLS therefore has another track that encourages banks to develop green and sustainability-linked loan frameworks, which will have to include eligibility criteria that are verified against internationally-recognised green and sustainability-linked loan principles. This removes the need for SMEs to develop their own customised frameworks before obtaining a green or sustainability-linked loan, and reduces the friction SMEs face in accessing such loans.
4. Under this track, MAS provides greater funding support to banks when they develop loan frameworks that are targeted at SMEs. Expenses incurred by banks to develop, verify and report on the green and sustainability credentials of loan frameworks targeted at SMEs will be defrayed by 90%, as compared with 60% of expenses for other green and sustainability-linked loan frameworks.
5. HSBC and OCBC have launched such green and sustainability-linked loan frameworks for SMEs. MAS expects to support more banks in developing such frameworks under the GSLS.
6. To promote awareness and encourage take-up of the GSLS, MAS is partnering Enterprise Singapore (ESG) and banks to reach out to SMEs.