Swire Properties has secured its first sustainability-linked loan, making it the first company of its type in Hong Kong to launch such a financing mechanism against its year-on-year environmental, social, and governance (ESG) performance.
The company reached an agreement with Crédit Agricole Corporate and Investment Bank (Crédit Agricole CIB) to convert an existing five-year revolving credit facility of HKD$500 million (dated August 2017) into a sustainability-linked loan, with the interest rate being indexed against the Company’s ESG performance.
Within this loan structure, Crédit Agricole CIB will grant a reduction in interest rates each year based on the following criteria:
- Swire Properties retains its listing on the Dow Jones Sustainability World Index (DJSI World).
- Swire Properties achieves a target reduction in energy use intensity (“EUI”, measured in units of kWh/m2) each year for its Hong Kong portfolio.
Since 2017, Swire Properties has been the only property developer and multinational corporation from Hong Kong and Mainland China to be included under the DJSI. The DJSI is the first global sustainability benchmark which tracks the stock performance of the world's leading companies in terms of economic, environmental and social criteria.
“In 2016, we launched our global Sustainable Development strategy, SD2030, which was designed to help us effectively integrate ESG considerations into every part of our business. This sustainability-linked loan reflects our desire to find new ways to finance and operate a more sustainable business,” said Guy Bradley, chief executive of Swire Properties. “From a market perspective, we are also excited to support the development of sustainable capital markets in Hong Kong.”
The loan will be used for investments supporting the company’s targets set under the SD2030 strategy, such as the adoption of advanced energy-saving technologies, and to fund ongoing green building developments, including Two Taikoo Place. The triple Grade-A office building is a notable component of the company’s Taikoo Place redevelopment project with Two Taikoo Place currently under construction and expected to be completed in 2022.
The sustainability-linked loan is Swire Properties’ second sustainable financing initiative, following the issuance of a US$500 million green bond in 2018. The new loan has been developed with reference to the framework of the internationally-recognised Sustainability Linked Loan Principles developed by the Loan Market Association, the Asia Pacific Loan Market Association, and the Loan Syndications and Trading Association.