Sustainable Fitch assigns HDB mid-tier ESG rating of three
Add BT as a preferred sourceChelsea Ong
FINANCIAL services company Sustainable Fitch on Thursday (Feb 23) announced it assigned the Housing and Development Board (HDB) an environmental, social and governance (ESG) entity rating of three.
The board also received an ESG framework rating of two, and a combined ESG instrument rating of three for the inaugural green bonds it issues.
The ESG ratings were assigned in September 2022 using information available at the time.
A rating of one indicates the entity has done very well in its performance, commitment and integration of environmental and social considerations into its business, strategy and management, as well as in its effective governance. Conversely, a rating of five indicates the entity has done badly in these areas.
Sustainable Fitch said it has a negative overall environmental view on the buildings sector, due to construction activities and high levels of resources consumed throughout a building’s lifespan.
Though the company acknowledged that the board followed best practices under the Building and Construction Authority Green Mark certification scheme, it said this constitutes a minority of HDB’s portfolio under management, and only partially mitigates the environmental impact associated with its building activities.
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In Sustainable Fitch’s view, HDB lags behind the general practice of the labelled bond market as the board does not publicly disclose its environmental and social metrics.
Since HDB’s annual reporting is aggregated by portfolio, this also limited its ability to identify specific impacts associated with individual transactions, noted Sustainable Fitch.
Nonetheless, the company believes HDB’s projects supported by the board’s green-bond proceeds should have a high level of environmental performance – given that these new buildings will achieve a minimum Green Mark certification of GoldPlus.
The positive impact of its green bonds was enhanced by HDB’s commitment to finance at least 50 per cent of its new projects with its bond proceeds, said Sustainable Fitch.
The company also viewed some of HDB’s business activities – such as favourable mortgage-lending terms, and subsidised housing schemes for low-income individuals – as positive from a “social perspective”.
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