SINGAPORE-based commodity trader Wilmar International has signed a green loan deal with OCBC Bank that pegs the interest rate of the trader's US$200 million credit facility to its sustainability performance.

This is the largest sustainability-linked bilateral loan by a Singapore bank – one that is funded by a single lender and in collaboration with the borrower on achieving sustainability targets, the companies say in a statement.

Under the agreement, Wilmar is committed to furthering the sustainability agenda based on pre-set targets for a comprehensive range of environmental, social and governance (ESG) metrics. These will be assessed annually by Sustainalytics, a global provider of ESG research and ratings.

If the targets are met, the interest rate on the facility will be subsequently reduced on a tiered basis.

This loan is an important step in the nation's sustainability movement. It builds on the Responsible Financing guidelines issued in 2015 by the Association of Banks in Singapore. The guidelines aim to raise the bar when it comes to responsible and sustainable finance across Singapore's banking sector.