- HSBC has sanctioned a loan of $81.67 million to Aldar Properties that has its interest linked to achievement of sustainability targets
- This reportedly made Aldar the first real-estate company in the Middle East and North Africa region to get such a loan
Global lender HSBC has sanctioned a loan of AED300 million ($81.67 million) to Abu Dhabi-based Aldar Properties that has its interest linked to achievement of sustainability targets, said local reports on Sunday, July 4.
The reports said this made Aldar the first real-estate company in the Middle East and North Africa region to get such a loan.
With climate change emerging as more and more of an issue across the board, including in bank loans, lenders across the world are starting to link interest rates of loans to the sustainability factor of the project for which the loan is being used.
To that end, HSBC’s own 2020 Sustainable Finance and Investing Survey found that sustainable finance was gaining momentum in the Middle East, with “values” being the main driver among issuers of bonds, loans, and other securities in the region.
According to local reports, HSBC’s five-year sustainability-linked loan to Aldar includes a mechanism to adjust Aldar’s interest margin annually in line with achievement of targets on energy and water intensity, waste recycling, and worker welfare. These targets were identified to be material to both Aldar and the wider real-estate sector, said the reports.
As part of the agreement, Aldar has also reportedly committed to investing a fixed amount in one or more qualifying environmental, social, and governance projects — ESG projects — if it does not reach agreed annual targets.
The reports quoted Greg Fewer, group chief financial and sustainability officer at Aldar, as saying: “Our financial stakeholders are increasingly factoring sustainability assessments into their portfolio strategies. At Aldar, we believe this shift in capital allocation is a positive force that creates a powerful incentive for companies to up their sustainability game to benefit from these capital flows.”