Malaysia-based CIMB Bank has entered into a 270 million ringgit (US$65 million) sustainability-linked term loan facility agreement with Malaren International, a subsidiary of StarHub Group, a Singapore provider of communications, information and entertainment services.
This deal marks the bank’s first sustainability-linked loan (SLL) since announcing its SLL offering in January 2020, with a commitment of 3 billion ringgit (US$727.7 million) to SLLs for corporate borrowers. This SLL also marks StarHub’s maiden loan linked to sustainability performance targets.
Sustainability is an integral part of both CIMB and StarHub’s strategy and operations. As an organisation that can influence sustainability best practices among its network, CIMB aims to steer clients towards adopting responsible business practices through mitigating negative impacts whilst enabling and incentivizing positive corporate behaviours. Providing this SLL is part of this sustainability approach, which facilitates corporate borrowers who are keen to enhance their sustainability performance in alignment with one or more of the United Nations’ 17 Sustainable Development Goals.
“As we are driving our business to support the growth and development of new services, we are pleased to underpin our commitment in our sustainability strategy by taking up our very first sustainability-linked loan with CIMB,” says Dennis Chia, chief financial officer of StarHub. “We look forward to more opportunities to participate in sustainability-linked financing to proactively drive a sustainable business and enhance the performance of the company.”
To incentivize environmental transparency and performance, CIMB will grant a rebate against the loan interest based on StarHub’s performance in its annual CDP climate change scores from full-year 2021 to full-year 2023. StarHub will be eligible for interest savings each year if it is able to achieve the pre-agreed annual targets on CDP climate change scores.
CDP, formerly known as the Carbon Disclosure Project, is a leading global benchmark on the management of climate-related impacts used to assess responders’ progress towards environmental stewardship.
CIMB is a founding signatory of the United Nations’ Environment Programme Finance Initiative Principles for Responsible Banking, the first ASEAN banking group to become a signatory, and a signatory of the Collective Commitment on Climate Action.