HSBC SLLs are available in a variety of corporate loans and credit facilities, with terms linked to pre-determined sustainability performance targets (SPTs). Achieving SPTs results in a lower interest expense, effectively bringing financial incentives to the borrower’s sustainability strategy.
In partnership with clients, HSBC structures SLLs in accordance with the Sustainability Linked Loan Principles, which are voluntary global guidelines set by the independent Loan Market Associations, whereby SPTs are to be meaningful and ambitious for the business, and performance is verified and reported regularly.
“We want to provide loans and access to credit in ways that meet the needs of American businesses, from financing growth and investment to support their sustainability strategy,” said Julie Bennett, Americas Head of the ESG and Strategic Solutions Group, HSBC Global Banking. “SLLs are another example of how we are embedding sustainability into our products and services, including access to capital markets, lending, transaction banking and advisory services.”
While tailored to be company specific, examples of SPTs include greenhouse gas emissions reduction, use of renewable energy, diversion of waste from landfills and reduced water use, as well as social and diversity metrics like increased workforce diversity.
Demonstrating innovation in SLLs, Mercon Coffee Group partnered with HSBC in the first coffee-only sustainability-linked revolving credit facility. Mercon aims to make its supply chain as sustainable as possible – from water and forest conservation and farm management, to implementing the best social practices in their producers’ coffee plantations – and this syndicated facility helps to fund Mercon’s sustainability goals through its sustainable production program LIFT. The interest cost is linked to Mercon’s performance against defined environmental and social SPTs, and HSBC will reduce the interest rate on the loan when Mercon meets the SPTs.
“Approximately 125 million people worldwide depend on coffee for their livelihood, and 25 million small famers producing 80 percent of the world’s coffee,” said Tony Nanez, North America Head of Commodity Finance, HSBC Global Trade and Receivables Finance. “HSBC is proud to support Mercon in its mission to support these farmers through our participation in their syndicated Sustainable-Linked financing facility.”
HSBC will host a LinkedIn Live broadcast, How to drive your ESG strategy: Lessons from coffee and cargo, on Thursday, June 17 at 12pm ET. Panelists are HSBC clients Juan Pablo Ibarra, COO at Mercon Coffee Corp., and Matt Borys, Treasurer and Head of Capital Markets at Atlas Corp (parent company of Seaspan), who will be talking about their overarching ESG strategies and how they are forging new paths in sustainable finance. The discussion will be moderated by Kelly Fisher, US Head of Corporate Sustainability, HSBC.
“By linking environmental and social sustainability targets to interest payments on in loans and credit facilities, we are mobilizing finance and supporting clients such as Mercon to achieve their sustainability vision,” said Kelly Fisher, US Head of Corporate Sustainability, HSBC. “Offering SLLs is part our commitment to not only play our part in, but lead the global transition to net zero as a provider of responsible banking services.”
More information about the opportunities for sustainability-linked loans and facilities to support the needs of American businesses is available at www.business.us.hsbc.com/sustainability.
HSBC Group announced in October 2020 a net zero strategy to align its provision of finance with the Paris Agreement goal of net zero by 2050 across all sectors in its client portfolio. At the core of the strategy is a commitment to support customers on their sustainability journey. HSBC expects to provide between $750 billion and $1 trillion in financing and investment to enable its clients’ net zero transition between 2020 and 2030.
HSBC also has launched Business Plan for the Planet, a global campaign to build further awareness of the importance of a net zero economy, and to showcase how HSBC can empower businesses with the understanding, the capabilities and the resources to help them make a low-carbon transition.
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