Towards net-zero emissions: How mid-cap firms can find flexible funding for green transition
Maybank, with a strong track record in sustainable financing, offers customised solutions for companies needing help to develop their decarbonisation efforts to grow their business
AMID geopolitical tensions and economic uncertainties, Maybank is witnessing a surge of opportunities from the green transition and unprecedented flow of foreign direct investments into Asean for renewable energy and clean mobility.
Adopting strong environmental, social, and governance (ESG), or more broadly, sustainability, has become a strategic imperative for the public and private sectors. For Singapore companies operating within global supply chains, the gains extend beyond environmental impact to encompass financial performance and market access.
Gregory Seow, head of Global Banking, Maybank Singapore, said: “In this new reality, the sooner businesses prioritise sustainability actions, the better prepared they will be to navigate the opportunities of a sustainable future. While large public listed companies are well-resourced to execute their transition to net zero, many mid-cap and smaller ones are struggling to get to the starting point of assessing baseline emissions.
“In tandem with Maybank’s M25+ strategic goals of Humanising Financial Services, we are focused on serving mid-cap champions on their sustainability journey. They are underserved, poised for high growth being the key drivers of Asean economies. A country’s low carbon agenda can be accelerated if these firms are aligned on decarbonising.”
Investing in ESG
Thilan Wickramasinghe, the head of Equity Research Singapore at Maybank Investment Banking Group (Maybank IBG) said: “Most of the management of mid-cap companies under our research coverage appreciate the increased attention on ESG, and understand that valuations can improve with better sustainability ratings.”
One way for these companies to attract institutional investors and further expand globally is to demonstrate strong sustainability in their processes and operations, he said.
“Our research universe shows that companies with negligible to medium ESG risk tend to outperform the MSCI benchmark indices. Companies that invest in sustainability are also more likely to build a culture of innovation to stay ahead and capitalise on emerging opportunities while exercising good corporate citizenship. They are more attractive to investors and lenders,” added Wickramasinghe.
“There is also regulatory pressure. Public listed companies in Singapore are progressively compelled to be more transparent about their sustainability disclosures.”
Climate reporting is mandatory for all listed companies on a “comply and explain” basis, while the Sustainability Reporting Advisory Committee, set up by the Accounting and Corporate Regulatory Authority (Acra) and Singapore Exchange Regulation (SGX RegCo), has recommended mandatory climate reporting from financial year 2025 for all listed issuers regardless of size.
Well-placed to support mid-caps
Maybank Global Banking has the capabilities to bring the whole-of-the-bank approach in providing sustainable financing and decarbonisation solutions.
In Singapore, Maybank Global Banking has been involved in several landmark transactions, acting as the Sole Lender and Sustainability Coordinator for Frasers Property Group’s first GBP110 million (S$185.9 million) SSL (Sustainability-Linked Loan), and as the Joint Mandated Lead Arranger and Bookrunner for OUE Commercial REIT’s S$978 million SSL, the largest in Singapore’s real estate sector in 2022.
Maybank’s Global Banking unit has also partnered KPMG Singapore in the latter’s Asean Decarbonisation Hub alongside other experts to help businesses manage the impact of climate change. As the only financial institution involved, Maybank will provide end-to-end sustainable financing solutions.
Seow said: “Today, there are more financing options that can be customised for clients. SSL, for instance, offers more flexibility to borrowers in hard-to-abate sectors, while we foresee transition financing will gain momentum as Asia has become the largest source of global emissions.”
Transition financing provides funding for greening of brown, emission-intensive sectors. Maybank became the first Malaysian bank to launch a Transition Finance Framework at the 28th United Nations Climate Change Conference (COP28). The framework outlines the bank’s approach of classifying and recognising financing solutions offered as credible transition finance, complementing the bank’s Sustainable Product Framework. These two frameworks reinforce Maybank’s commitment to playing a leading role in the systematic transformation towards a net-zero economy, and provide a reference point to structure deals in Singapore.
As a group, Maybank has mobilised RM53 billion (S$15.1 billion) of sustainable financing from 2021 to the end of September 2023, on track to achieve its target of RM80 billion (S$22.9 billion) by 2025.
Seow added: “Maybank’s top strategic priority is to provide best-in-class customer experiences and become the go-to financial institution for all inter-country businesses with Malaysia, and lead deals within Asean, and between Asean and Greater China.”
Due to its pivotal efforts, Maybank has won prestigious accolades and market recognition. In 2023, it earned The Banker’s Bank of the Year in Asia Pacific and Singapore, and ABF Corporate & Investment Bank of the Year and Green Deal of the Year awards in Singapore.
Seow said: “With Maybank’s vision, track record and boots on the ground in 10 markets, we are well positioned to partner and support clients on their journey towards decarbonisation and net zero. Businesses starting now rather than later will have more runway to adapt, and to make optimal investment decisions for a more sustainable future.”