Schemes and Initiatives
 Published Date: 15 June 2023

Sustainable Loan Grant Scheme

The Sustainable Loan Grant Scheme (SLGS) supports corporates of all sizes to obtain sustainable and transition financing by defraying the expenses of engaging independent service providers to validate the sustainability credentials of the loan. It offsets up to S$125,000 of expenses incurred for external reviews of eligible green, social, sustainability, sustainability-linked as well as transition loans, and promotes the adoption of internationally recognised standards and taxonomies.

 

As announced on 20 April 2023 by Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance, and Deputy Chairman of MAS, MAS will set aside a total of S$15 million to enhance and extend the sustainable bond and loan grant schemes to support transition instruments till 31 December 2028.

 

Grant Details

The details of the scheme are as follows:

Table A: Sustainable and Transition Loans

Grant Criteria Details
Qualifying Borrower

  • Company[1] or financial institution based onshore or offshore. Alignment to international disclosure frameworks and standards[2] is strongly encouraged[3].
Qualifying Instrument[4]
  • Green Loan
  • Social Loan
  • Sustainability Loan
  • Sustainability-Linked Loan
  • Transition[5] Loan
Qualifying Loan

A Qualifying Loan needs to meet the following criteria:

  • Loan tenure of at least 3 years
  • Loan size of at least S$20 million (or equivalent in another currency)

External review[6] requirements

Green, Social, and Sustainability Use of Proceeds Loans

 At pre-origination of loan:
  • External review to demonstrate alignment of the loan with internationally recognised green loan principles
Transition Use of Proceeds Loans 
At pre-origination of loan:
  • The borrower has developed and publicly disclosed an entity-level transition plan[7].

External review to demonstrate that:

  • The transition loan is aligned with internationally recognised transition finance guidance / principles / standards[8]; and
  • The use of proceeds of the loan is aligned with activities identified within the transition category under the Singapore-Asia Taxonomy or any other internationally recognised taxonomy with an equivalent transition category[9].

Qualifying Borrowers must also fulfil the following requirement post-origination:

  • External review[10] (on an annual basis, for the 3-year funding period) to verify the:
    • Continued alignment of the transition loan with internationally recognised transition loan guidance/principles/standards;
    • Continued alignment of the use of proceeds to activities identified within the transition category under the Singapore-Asia Taxonomy or any other taxonomy with an equivalent transition category.
Sustainability-Linked Loan 

 At pre-origination of loan:

  • External review to demonstrate alignment with internationally recognised sustainability-linked loan principles.

Qualifying Borrowers must also fulfil the following requirement post-origination:

  • External review[11] (on an annual basis, for the 3-year funding period) to verify the attainment of the Qualifying Borrower’s SPTs[12]
 Revenue  Banks More than 50% gross revenue[13] from the loan is attributable to the bank in Singapore (which should be a licensed financial institution in Singapore).

Licensed financial institutions are defined by the following licenses:

  • Any bank or merchant bank licensed under the Banking Act 1970;
  • Any finance company licensed under the Finance Companies Act 1967;
  • An entity that holds a Capital Markets Services Licence under the Securities and Futures Act 2001 to carry out regulated activities – Advising on Corporate Finance or Dealing in Capital Markets Products – Securities.
  Sustainability Advisory and Assessment Service Providers[14]

More than 50% of the gross revenue[15] from the sustainability advisory and assessment services is attributable to Singapore-based service providers.
 Eligible Expenses

Costs incurred by the Qualifying Borrower that are directly attributable to a Qualifying Loan in respect of engaging sustainability advisory and assessment service providers[16] for the following:

  • Development of a loan framework or Sustainability Performance Targets (SPTs);
  • Pre- and post- loan origination external review[17] or assurance, based on internationally recognised sustainable and transition loan guidance/principles/standards and/or taxonomies;
  • Reporting on the use of proceeds of the loan and their expected impact, or SPT achievement and impact.
 Per loan cap[18]
 

100% funding on all Eligible Expenses capped at the lower of the following:

  • S$100,000, if the issuer has not complied with any internationally recognised disclosure standards.[19]
  • S$125,000 if the issuer has complied with any internationally-recognised disclosure standards.
 

Per borrower cap[20]

  Capped at a maximum of 2 instruments.
 Funding period

Funding period of three years from the applicant’s loan origination date.

 

[1] Includes international organisations, such as the International Finance Corporation or World Bank, but excludes sovereigns.
[2] Such as, but not limited to, Taskforce for Climate-related Financial Disclosures (TCFD) and the International Sustainability Standards Board (ISSB) and European Sustainability Reporting Standards (ESRS).
[3] This recommendation will be monitored and evaluated by MAS on an ongoing basis to keep in tandem with local disclosure regulations.
[4] Excludes refinancing of existing loans already supported by the grant.
[5] To qualify, the transition loans must be aligned to internationally recognised transition guidelines/ principles/standards, and the use of proceeds must be for activities defined under the transition category of the Singapore-Asia Taxonomy or any other internationally recognised taxonomy with an equivalent transition category. “Internationally recognised transition guidelines/ principles/standards” include those published by the International Capital Market Association (ICMA), Climate Bonds Initiative (CBI), Loan Market Association (LMA), and Loan Syndications and Trading Association (LSTA), and Singapore market specific principles/ standards/ guidelines/ handbooks, but excludes other national-based principles/ standards/ guidelines/ handbooks.
[6] External review refers to a Second Party Opinion, verification, certification, or alignment to taxonomy.
[7] Where an external review is performed to demonstrate the alignment of the transition loan to the ICMA Climate Transition Finance Handbook, the applicant would be deemed as meeting both the requirement to align the transition loan to internationally recognied guidance/principles/standards, and the requirement to develop and publicly disclose the borrower’s entity-level transition plan. Such disclosures could be included in company’s annual report, framework document or investors presentation, as long as they are publicly accessible to investors.
[8] Refers to those published by ICMA, CBI, LMA, and LSTA etc. and Singapore market specific principles/ standards/ guidelines/ handbooks, but excludes other national-based principles/ standards/ guidelines/ handbooks.
[9] Equivalent taxonomies refer to taxonomies for which the transition category thresholds meet minimally the same or similar thresholds to the Singapore-Asia taxonomy whereby the thresholds set for the amber/transition category are "moving towards a 1.5 degree Celsius aligned green transition pathway".
[10] All external review documents created as an outcome of funding under the grant scheme are required to be shared with the MAS.
[11] All external review documents created as an outcome of funding under the grant scheme are required to be shared with the MAS.
[12] Following consultations with the industry, MAS has removed the earlier requirement of having minimally two of the total SPTs contribute to environmental objectives of the UN Sustainable Development Goals or Sustainability Linked Loan Principles.
[13] Gross revenue should be net of recharges. 
[14] Sustainability advisory and assessment service providers include entities that provide services such as the development of loan frameworks and SPTs, external reviews, second party opinion, verification, certification, advisory, alignment to taxonomy, and reporting.
[15] For avoidance of doubt, this figure is net of all internal recharges.
[16] For avoidance of doubt, this does not include costs incurred by the borrower for sustainability advisory services provided by the arranging bank.
[17] This includes Second Party Opinions (SPO), verification, and certification. We have removed ESG Ratings as an eligible expense, as work by MAS to develop an Industry Code of Conduct for ESG rating and Data Product Providers to elevate standards and disclosures of ESG ratings and data products in Singapore progresses.
[18] Per-instrument cap refers to the amount claimable under each qualifying loan.
[19] Examples of internationally recognised disclosure standards include, but not limited to, Task Force on Climate-related Financial Disclosures (TCFD), International Sustainability Standards Board (ISSB), and European Sustainability Reporting Standards (ESRS).
[20] Per-borrower cap refers to the number of successful applications under each qualifying borrower.

Green and Sustainability-linked Loan Frameworks (To be discontinued from 1 Jan 2024)

MAS will discontinue Track B of the Green and Sustainability-Linked Loan Grant Scheme (GSLS) – Loan Frameworks – when it expires on 31 December 2023. MAS has seen positive uptake since its inception two years ago and observed that many banks have put in place sustainable lending frameworks, including those targeted at SMEs and individuals. Track B will remain valid and open to applications until 31 December 2023.

Table B: Loan Frameworks

Grant Criteria Details
Qualifying Borrower
  • Financial Sector Incentive (“FSI”) company In Singapore
Qualifying Framework

A Qualifying Framework is defined as:

  • Green & Sustainability-Linked Loan frameworks which include green loans and/or Sustainability-Linked Loans (excludes enhancements of existing frameworks already supported by the grant)
  • Green & Sustainability-Linked Loan Frameworks for SMEs & Individuals are defined as frameworks for (i) individuals or firms with annual revenue of up to S$100 million, and (ii) loan sizes less than S$20 million
Frequency
  • Qualifying Institutions may apply for the grant each time they have a Qualifying Framework
 

External review requirements

 

(External review refers to a Second Party Opinion, verification, certification or rating)

 At pre-origination of framework:
  • External review to demonstrate its alignment with internationally-recognised green or Sustainability-Linked Loan principles, or creation of the framework in consultation with sustainability advisory and assessment service providers where the framework is aligned with internationally-recognised green or Sustainability-Linked Loan principles

In addition, Qualifying Institutions must fulfil the following requirements post-origination:

  • External review (on an annual basis, for the 3 year funding period) to demonstrate continued alignment of the framework with internationally-recognised green or Sustainability-Linked Loan principles
Bank Requirements
  • Sustainability advisory and assessment work of the loans originated from the framework to be performed in Singapore. 
    Note: Assessment work refers to evaluating the eligibility of projects and reviewing the allocation of proceeds for green loans based on information reported by the borrower. For SLLs, this includes identifying or assessing SPTs and reviewing the borrower’s actual performance against these SPTs               
  • Design and conceptualisation of the framework must be performed in Singapore
Sustainability Advisory and Assessment Work

More than 50% of the gross revenue from the sustainability advisory and assessment services must be attributable to Singapore-based service providers

 

Note: Sustainability advisory and assessment service providers include entities that provide services such as the development of loan frameworks and SPTs, external review, second party opinion, verification, certification, rating, advisory, and reporting
Qualifying Expenses

Pre- and post-framework origination costs incurred in engaging sustainability advisory and assessment service providers include: 

  • Development of a green or Sustainability-Linked Loan framework
  • External review (SPO, verification, certification) done on the framework based on any internationally-recognised green or Sustainability-Linked Loan principles
  • Reporting on the green or Sustainability-Linked Loan framework, loans financed and their expected impact
Per framework cap

  • Green & Sustainability-Linked Loan Frameworks for SMEs and Individuals: 90% co-funding capped at S$180,000 of total costs, over a period of 3 years

  • Other Green & Sustainability-Linked Loan Frameworks: 60% co-funding capped at S$120,000 of total costs, over a period of 3 years
Funding period

Funding period of three years from the applicant’s first claim

 

Note: For clarity, applicants with frameworks launched from 1 October 2020 onwards can apply for the scheme from 1 January 2021 onwards. Applicants need to submit applications no later than 3 months from the date when the framework was launched.

How to Apply

Interested parties can write to fsdf@mas.gov.sg to obtain the application form or for more information.

Applicants should submit their applications no later than 3 months after the origination date.