OCBC’s SME sustainable financing loan book doubled to over S$7 billion in 2023

IN THE last year, OCBC more than doubled the sustainable financing that it provides to small and medium-sized enterprises (SMEs) to over S$7 billion, up from S$3.3 billion in 2022.

Cumulatively, there are now more than 1,200 SMEs in Singapore and elsewhere in Asia that have taken up sustainable financing with OCBC. Of these, more than 80 per cent are from the built environment, clean transportation, energy efficiency and renewable energy sectors.

The bank also aims to at least double the number of sustainability-linked loans (SLLs) that it has extended to regional enterprises, up from 24 as at 2023, and just one in 2022.

SLLs differ from other forms of sustainable financing in that they require sustainability performance targets to be met at different stages of the loan.

There has been “good momentum” for SMEs to adopt sustainable practices and tap financing to do so, said OCBC head of global commercial banking Linus Goh on Monday (Feb 5).

“Typically, if SMEs watch their peers in the industries start to make a move, they will want to equalise, because they don’t want to be differentiated negatively,” he said at a media briefing for the third anniversary of the bank’s sustainability framework.

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For SMEs that are part of a wider supply chain, there is also urgency to adopt sustainable practices as larger companies and multinational firms begin to track Scope 3 emissions, Goh said. These are emissions arising from a company’s entire value chain, including those from suppliers, customers and employees.

Yet, education and awareness remain key barriers for many SMEs in going green, said Goh. In particular, SMEs may lack people with the know-how to implement – and sustain – sustainability-related changes.

OCBC aims to help them on this front, he said. “Our conviction is that at some point soon, the (sustainability) tidal wave will come, and if they are caught straggling with everybody else, they may miss that opportunity.

“So we are reaching out, (and) we’re reaching out in a big way.”

This includes partnering more consultants and third-party verifiers to support SMEs under the bank’s sustainability framework. OCBC also organises webinars and information-sharing sessions for its SME clients, where companies share their experience in taking on green financing.

The framework was launched in Singapore in November 2020 and extended to Malaysia, Hong Kong and Indonesia from 2022.