DBS Taipei Branch signed a sustainability-linked loan with AU Optronics, the first for an IT company in Asia-Pacific. The loan was evaluated based on a series of environmental, social and governance performance metrics.
DBS Bank's three-year, NTD 2 billion (S$ 88 million) sustainability-linked loan with AU Optronics is the first of its kind in Taiwan and the first for an IT company in Asia-Pacific. AU Optronics is a specialist in making panel displays which are used in devices such as televisions, desktop monitors, mobile phones, and public information displays.
«The core value of a sustainability-linked loan is to incentivize and reward corporations to advance their sustainability agenda,» said Tony Luo, Head of Institutional Banking Group at DBS Bank (Taiwan) in a media statement on Tuesday.
Loan Evaluated on ESG performance metrics
For DBS Bank’s sustainability-linked loans, corporates are evaluated based on an annual sustainability review report assessed by an external independent party, tracking the performance of corporates in terms of governance, environmental and social criteria. When the borrower meets or exceeds pre-determined ESG targets, the interest rate will then be reduced.
Luo further explained that unlike green loans which are used to exclusively finance or re-finance eligible green projects, capital from sustainability-linked loans can be used for general corporate purposes. This provides more flexibility to borrowers, and the impact goes beyond environmental aspects to cover comprehensive environmental, social and governance (ESG) developments of an organization. In 2018, DBS Group inked four sustainability performance-linked loans amounting to over S$ 600 million.
