CLAS secures first OCBC 1.5°C loan

CapitaLand Ascott Trust (CLAS) is the first lodging trust to secure an OCBC 1.5°C loan. With this SGD 165 million ($124.5 million) sustainability-linked multi-currency revolving credit facility, CLAS will receive interest rate reductions upon meeting the agreed annual greenhouse gas (GHG) emissions reduction targets. Proceeds of the facility will be utilised for general corporate purposes.

CLAS’ GHG emissions reduction targets are aligned with its sponsor CapitaLand Investment’s (CLI) 2030 Sustainability Master Plan. CLI has committed to achieve Net Zero emissions by 2050 for its Scope 1 and 2 GHG emissions, and targets to reduce absolute Scope 1 and 2 GHG emissions by 46% by 2030. These targets have been validated by the internationally recognised Science Based Targets initiative (SBTi) in 2022 to align with a 1.5°C trajectory, in alignment with the goals of the Paris Agreement.

The OCBC 1.5°C loan reflects OCBC’s longstanding commitment to support its customers on their Net Zero journeys with market-leading transition advisory and innovative financing solutions. There is increasing interest in this financing solution, reflecting the heightened momentum in the global Net Zero movement and the bank’s active engagement with clients on their decarbonisation ambitions. As at 30 June 2024, OCBC’s sustainable financing loans had grown 33% from a year ago, and total sustainable financing loan commitments stood at SGD 63.3 billion ($47.7 billion).

Serena Teo, CEO of CapitaLand Ascott Trust Management and CapitaLand Ascott Business Trust Management, said: “At CLAS, sustainability is a key focus and priority in everything we do. It is integrated throughout our business, including our capital management strategy. Leveraging CLAS’ leadership in sustainability, we are able to dovetail our environmental efforts with our financing needs. With this facility, CLAS has secured a total of over SGD 700 million ($528.4 million) in sustainable financing to date. We continue to collaborate with like-minded stakeholders in the banking and finance industry to do good, as we deliver long-term value to our stapled securityholders.”

Elaine Lam, head of global corporate banking at OCBC, said: “We are pleased to support CLAS and its decarbonisation ambitions with our OCBC 1.5°C loan. We launched this financing solution last year to incentivise corporates to set and work towards clear carbon emissions reduction targets aligned with internationally recognised, science-based Net Zero decarbonisation pathways for their sectors. Despite macroeconomic challenges, it has been very encouraging to see more companies across various sectors in the region chart out their Net Zero journeys and set SBTi-aligned decarbonisation targets. For those companies that are not quite as advanced yet, we have been actively engaging them on their transition plans and viable next steps to take. We are committed to support their Net Zero ambitions and the shift to a low-carbon future.”

As of May 2024, CLAS has greened 51% of its global portfolio (by gross floor area), higher than its target to green 50% of its portfolio by 2025, and is on track to green 100% of its portfolio by 2030. At the end of 2023, CLAS also made significant progress towards its decarbonisation goals, reducing its absolute Scope 1 and 2 emissions by 15.5% and achieving a 6.9% reduction in energy consumption intensity against its 2019 baseline. CLAS was named the ‘Global Sector Leader (Listed – Hotel)’ in the 2023 GRESB Real Estate Assessment for the third consecutive year. CLAS remains steadfast as it progresses towards its sustainability goals as it grows as a trust.

OCBC continues to partner with clients and industry stakeholders to support and accelerate the Net Zero transition for the built environment sector. A recent initiative is the partnership with decarbonisation tech and investment platform Carbonless Asia on the Hong Kong Green Tech Challenge – Green Building Edition. As a strategic partner for the challenge, OCBC will provide financial, technical and regulatory/compliance expertise to the Challenge participants as they develop innovative solutions for the use cases.

OCBC also co-authored the world’s first global practical guide on sustainable finance for the built environment, through the Singapore Green Building Council and with an alliance of leading international green building organisations. Titled “Financing Transformation: A Guide to Green Building for Green Bonds and Green Loans,” the guide outlines how various green building certification and rating systems can comply and align with global classification and bond frameworks, aligning with OCBC’s sustainable financing practices for the sector.

Re-disseminated by  Wealth and Society