Sembcorp Marine has secured a SGD 500m ($375m) sustainability-linked financing facility as part of its strategy to focus on greener energy solutions.

The facility, secured from Singapore’s largest bank DBS, is believed to be the first Singapore Overnight Rate Average (SORA) based sustainability-linked loan for the maritime industry.

The loan’s interest rate comprises two components: a compounded daily SORA rate calculated in arrears, and an applicable margin.

Sembcorp Marine said the loan features interest rate discounts linked to pre-determined environmental, social and governance (ESG) targets, which when achieved result in lower borrowing costs.

The company said receiving interest cost savings through meeting its ESG targets was a “practical and tangible way by the financial community to acknowledge the efforts and milestones of our sustainability journey”.

“The inclusion of green financing dovetails with our strategic transformation and pivot since 2015 to provide innovative engineering solutions to the global offshore and marine and energy industries, with a keen focus on cleaner, greener and renewable energy solutions,” Sembcorp Marine group finance director William Goh said.

Environmental impact

“This sustainability-linked financing complements our ongoing efforts to proactively manage the environmental impact of our business.”

Dorian Delteil, head of oil and gas at DBS, said the bank believes financial institutions have a key role to play in supporting companies' work towards a lower-carbon future.

“Every transitional step will contribute to making an important difference, and we strive to continue engaging with like-minded clients, such as Sembcorp Marine, in making the shift towards more sustainable operations and working towards achieving a net zero-emissions economy,” he said.

Sembcorp Marine said SGD 530m of its projects last year were “related to green solutions including scrubber and ballast water management system retrofits, and gas and renewable energy projects”.

The Singapore-listed yard group said it has also introduced more green features in its operations including solar power at its steel fabrication facility at its Tuas Boulevard yard.

“This solar source generated more than 5,000 MWh of electricity, enabling Sembcorp Marine to avoid emissions of approximately 2,100 tonnes of carbon,” the company said.

To increase its support for businesses looking to achieve their sustainability ambitions, DBS said it has committed to finance SGD 50bn in renewable, clean-energy and green projects by 2024 — more than doubling its earlier target of SGD 20bn.