Written Answer

Measures to Target SME Awareness and Accessibility under Green and Sustainability-linked Loan Grant Schemes

4 January 2021 · Prime Minister's Office

Speakers

He Ting Ru Tharman Shanmugaratnam (Senior Minister and Coordinating Minister for Social Policies)

Summary

This question concerns Ms He Ting Ru’s inquiry regarding specific measures to enhance Small and Medium Enterprise (SME) awareness and accessibility for the 2021 Green and Sustainability-Linked Loan Grant Scheme (GSLS). Senior Minister Tharman Shanmugaratnam explained that the Monetary Authority of Singapore (MAS) defrays up to $100,000 in verification expenses for borrowers to support the adoption of green credentials. To reduce administrative friction, a specific GSLS track encourages banks to develop pre-verified sustainability frameworks, removing the requirement for SMEs to create their own customized versions. MAS provides enhanced support by covering 90% of expenses for SME-targeted bank frameworks compared to 60% for others, with HSBC and OCBC already launching such initiatives. Additionally, MAS is collaborating with Enterprise Singapore and banks to promote awareness and encourage broader SME participation in the scheme.

Transcript

5 Ms He Ting Ru asked the Prime Minister what specific measures will be implemented to target SME awareness and accessibility for the planned Green and Sustainability-Linked Loan Grant Schemes which will be rolled out in 2021.

Mr Tharman Shanmugaratnam (for the Prime Minister): MAS' Green and Sustainability-Linked Loan Grant Scheme (GSLS) aims to support companies of all sizes, including SMEs¹.

MAS will defray up to $100,000 of the expenses incurred by borrowers in engaging independent service providers to verify the green and sustainability credentials of such loans.

While the GSLS supports the adoption of such loans, MAS recognises that the cost, time and effort of procuring the necessary sustainability advisory and assessment services may not be commensurate with the loan quantum, particularly for smaller SMEs. The GSLS therefore has another track that encourages banks to develop green and sustainability-linked loan frameworks, which will have to include eligibility criteria that are verified against internationally-recognised green and sustainability-linked loan principles. This removes the need for SMEs to develop their own customised frameworks before obtaining a green or sustainability-linked loan, and reduces the friction SMEs face in accessing such loans.

Under this track, MAS provides greater funding support to banks when they develop loan frameworks that are targeted at SMEs. Expenses incurred by banks to develop, verify and report on the green and sustainability credentials of loan frameworks targeted at SMEs will be defrayed by 90%, as compared with 60% of expenses for other green and sustainability-linked loan frameworks.

HSBC and OCBC have launched such green and sustainability-linked loan frameworks for SMEs. MAS expects to support more banks in developing such frameworks under the GSLS.

To promote awareness and encourage take-up of the GSLS, MAS is partnering Enterprise Singapore (ESG) and banks to reach out to SMEs.