Singapore-based global real estate company City Developments (CDL) has secured a sustainable financing milestone as the first corporate to obtain an OCBC 1.5°C loan, with interest rate incentives pegged to annual decarbonization performance targets.
The OCBC 1.5°C loan is a new financing solution launched earlier this year by Singapore lender OCBC to incentivize corporates to set and work towards clear carbon emissions reduction targets aligned with internationally recognized, science-based net-zero decarbonization pathways for their sectors.
When the annual targets are met or exceeded, corporates will get a reduced interest rate on their loans. The reference pathways, developed by autonomous global organizations, are geared towards achieving a net-zero level of greenhouse gas (GHG) emissions by 2050 to limit global warming to 1.5 degrees Celsius above pre-industrial levels.
As part of the loan terms, CDL will enjoy interest rate reductions upon meeting the pre-agreed annual decarbonization performance targets, in line with CDL’s Science Based Targets initiative.
These include validated targets of a reduction in GHG emissions intensity by 63% per square metre leased area (Scope 1 and 2), 41% per square metre gross floor area (Scope 3 GHG emissions from purchased goods and services) and 58.8% including hotels managed by CDL’s wholly-owned hotel subsidiary, Millennium & Copthorne Hotels (Scope 3 GHG emissions from investments) against its 2016 baseline by 2030.
The three-year £200 million (S$338.3 million) facility, CDL notes, will be used for refinancing, general corporate funding and working capital purposes, and is aligned with CDL’s commitment to achieve operational net zero by 2030 for its new and existing wholly-owned assets and developments under its direct operational and management control. The latest agreement brings CDL’s total sustainable financing secured to date to around S$6 billion (US$4.49 billion).
In 2022, CDL achieved a 24% reduction in carbon emissions intensity against its baseline year. It achieved a 10% reduction in total operational carbon emissions across all its business operations in Singapore compared with 2021 and a 22% reduction in embodied carbon of building materials compared with the conventional equivalents.
Yiong Yim Ming, CDL’s group chief financial officer, says: “With rising investor expectations and a global shift to a low-carbon economy, we will continue to explore more sustainable financing initiatives aimed at developing green buildings that enhance our emissions pathways to reach our decarbonization targets.”