HSBC has arranged a trade facility for multinational garment manufacturing company Epic Group that it says is its first sustainability-linked trade finance transaction in Hong Kong.
The proceeds will support Epic Group’s working capital and trade cycle, with pricing tied to its performance in greenhouse gas emissions intensity, freshwater use intensity, as well as Higg Facility Environmental Module – a system used by garment brands to review suppliers’ sustainability capacity.
HSBC has not disclosed the size of the transaction, but a spokesperson for the bank tells GTR that it is a revolving facility that includes a periodic review of the sustainability performance targets that pricing is linked to, adding that the incentives cover facilities in both import and export loans.
“We worked closely with Epic Group in identifying the three sustainability performance targets that are most relevant to the group’s ESG roadmap,” the spokesperson says. “When setting targets, our aim is to be ambitious – at the same time the targets need to be core to the client’s overall business, not to mention of high strategic significance to its current and future operations. As these targets are directly related to the amount of water and energy used during the course of production, by achieving these targets we believe the client will make a positive environmental impact.” The spokesperson adds that the pricing offered for achieving these targets incentivises Epic Group to continue investing into ESG.
This is the latest in a number of sustainability-linked trade transactions from HSBC. Most recently, the bank last month introduced science-based emissions reduction targets into its longstanding sustainable supply chain finance programme for American retail giant Walmart, which sees suppliers who meet sustainability goals get cheaper financing.