DBS Bank Taiwan (星展銀行) has provided a two-year sustainability-linked loan (SLL) worth NT$1 billion (US$35.05 million) to Wistron Corp (緯創), with the loan’s interest rate set to fall next year at the soonest if Wistron’s sustainability performance improves, the lender said on Wednesday.
That marked DBS Taiwan’s second major sustainability-linked loan after a NT$2 billion loan to AU Optronics Corp (AUO, 友達光電) in 2019.
Similar to its loan arrangement with AUO, DBS Taiwan would lower the interest rate on Wistron’s loan if the debtor reaches several targets regarding environmental, social and governance (ESG) practice.
Photo: Lee Chin-hui, Taipei Times
The targets were set by DBS after discussions with the debtor, the bank said.
DBS would assign third-party institutions to review the contract electronics maker’s ESG practice based on the firm’s corporate social responsibility report this year.
If the results of the review indicate that the targets have been achieved, the interest rate would be reduced next year at the earliest, the bank said.
“We hope to provide an effective incentive for companies to advance their ESG programs,” DBS head of institutional banking group Tony Luo (羅綸有) said in a statement.
Wistron, whose products include handsets, servers, laptops, PCs, tablets, video game consoles and LCD modules, ranked among the top 5 percent in the Taiwan Stock Exchange’s corporate governance evaluation, the bank added.
DBS did not reveal the targets for Wistron, citing confidentiality agreements.
However, according to the Financial Supervisory Commission, an SLL approval should be tied to a debtor’s practices in environmental protection, social welfare, or corporate governance, such as greenhouse gas reduction, waste management, water efficiency and food security.
“It has been a global trend to balance business and sustainable development.” DBS Taiwan general manager Lim Him Chuan (林鑫川) said in a statement.
DBS Taiwan’s parent company, DBS Bank Ltd, has raised its sustainable finance target to S$50 billion (US$37.2 billion) by 2024, accelerating its sustainability agenda of helping clients incorporate sustainable business practices into their overall business strategy, Lim said.
DBS Taiwan was the first bank in the nation to issue an SLL, followed by HSBC Bank (Taiwan) Ltd (匯豐台灣商銀) and Taipei Fubon Commercial Bank (台北富邦銀行).
The former offered the loans to Taya Group (大亞集團) and Sinbon Electronics Co (信邦電子) last year, while the latter provided financing to Merry Electronics Co (美律實業) earlier this year.
Overall, the sustainable finance market in Taiwan is growing, albeit at an early stage, compared with green finance or regular finance, commission data showed.
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