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Tag: sustainable finance

  • BRAC Bank to Issue Tk 1,000 Crore Green Bond

    BRAC Bank to Issue Tk 1,000 Crore Green Bond

    BRAC Bank announced at a press conference in Dhaka today that it will issue a Tk 1,000 crore green bond to channel long-term debt into industrial energy-efficiency and renewable projects.

    The three-year debt instrument carries a face value of Tk 10 lakh per unit and targets a yield of 7.5 percent, priced at roughly Tk 8.05 lakh at issuance under annual compounding.

    Led by Managing Director and CEO Tareq Refat Ullah Khan, the private lender is launching the first debt offering in Bangladesh aligned with the central bank’s green bond policy.

    Structure of the Zero-Coupon Paper

    The issue will be senior, unsecured, non-convertible, fully redeemable and zero-coupon. Rather than disbursing periodic interest, the bank will sell the paper at a discount and redeem it at par upon maturity.

    Corporate institutions, individual investors, and qualifying corporate provident and gratuity funds can subscribe to the tranche. The paper adheres to Bangladesh Bank’s green bond financing guidelines alongside the International Capital Market Association’s Green Bond Principles, backed by a second-party opinion from S&P Global Ratings.

    Proceeds will target factory energy retrofits, rooftop solar arrays, and certified green commercial properties. The lender expects the deployment to align with United Nations Sustainable Development Goals covering clean energy, industry innovation, sustainable cities, and climate action.

    Factory Energy Demands Drive Tenor Mismatch

    Export-oriented manufacturing plants and textile suppliers across Bangladesh face steep domestic power tariffs alongside buyer pressure to decarbonise supply chains. Factory owners frequently seek multi-year capital expenditure loans to replace aging machinery with automated, low-emission lines.

    Commercial banks usually finance those long-term outlays with short-term customer deposits, creating chronic liquidity strains on balance sheets. Locking in three-year fixed capital through non-convertible debt gives the lender a matched pool of cash, though the three-year duration remains relatively short for heavy industrial upgrades.

    This green bond marks an important milestone in BRAC Bank’s sustainable finance journey and represents a meaningful step towards deepening Bangladesh’s capital market, said Tareq Refat Ullah Khan, managing director and chief executive officer of BRAC Bank.

    The zero-coupon structure provides a distinct advantage through domestic tax exemptions supported by the Bangladesh Securities and Exchange Commission. Because taxable income from standard coupon payouts is avoided, institutions holding the debt can preserve effective yields in a high-inflation environment.

    Shallow Corporate Debt Market Faces Test

    Domestic capital markets in Bangladesh remain overwhelmingly concentrated in government treasury bills, leaving private corporate paper thin and illiquid. Most local companies rely on direct bilateral bank loans rather than secondary debt markets to fund operational expansions.

    If institutional pension managers clear the Tk 1,000 crore book cleanly, other commercial lenders will likely package similar trade-finance and manufacturing loans into fixed-income paper. If orders fall short, mid-tier lenders will find themselves locked out of local capital markets and forced back into competitive deposit gathering.

    Lender Expands Sustainable Portfolio

    Sustainable finance currently makes up more than 60 percent of BRAC Bank’s total lending book. The private lender previously issued a dedicated social bond to fund rural micro-enterprises and small suppliers.

    The bank has secured a spot among the central bank’s top-rated sustainable financial institutions for five straight years and holds the leading position among local lenders in Bloomberg’s ESG Rating. Annual audits will track the disbursement of funds to verify that borrowers apply capital strictly to certified sustainable projects.

    Distribution desks are now taking formal indications of interest ahead of official allotment dates, with secondary trading liquidity serving as the real test of institutional appetite.

  • UOB Thailand Reaches 74.6 Billion Baht in Sustainable Financing

    UOB Thailand Reaches 74.6 Billion Baht in Sustainable Financing

    UOB Thailand extended 74.6 billion baht in cumulative sustainable financing through the end of 2025. The lender directed credit across contractors, corporate borrowers and commercial supply chains.

    That volume reflects a shift from broad environmental pledges to direct operational spending by local suppliers.

    Speaking at the Global Compact Network Thailand forum, UOB Thailand chief executive Richard Maloney said the bank is targeting practical industrial bottlenecks. Credit focuses on high electricity bills, aging factory boilers and chillers, vehicle fleet electrification and client-mandated carbon reporting.

    Targeting Supply Chains and Export Rules

    Thai suppliers face immediate operational pressure from export markets tightening compliance rules, including the European Union Packaging and Packaging Waste Regulation. To close those gaps, UOB has advised more than 1,800 local businesses through its Sustainability Compass advisory platform.

    Thamolwan Prougestaporn, senior vice president of ESG solutions at UOB, outlined a five-stage framework for small and medium-sized enterprises. Companies must understand sector-specific rules, measure current carbon baselines, set targets, execute factory changes and integrate sustainability into core operations.

    “A well-defined first project is easier to finance than an ambitious but vague five-year plan, and it builds the track that makes the next one, and the one after that, easier still,” said Maloney.

    Operational Hurdles for Factory Suppliers

    Capital access remains constrained by internal reporting limits across Thailand’s industrial base. Federation of Thai Industries representative Dr Saowanit Boonyasuwat noted that small enterprises often stall during loan underwriting. They run into complex compliance terminology, a lack of formal carbon audits, and an inability to turn energy audits into bankable loan applications.

    Industry bodies are now pairing with state-backed financing programs to standardize application channels. Thailand cannot hit its national net zero emissions targets without small manufacturing suppliers decarbonizing their shop floors.

    Data verification presents another test for regional exporters. Carbon analyst Soranee Achawanantakul pointed out that local firms need verifiable data records to prevent greenwashing claims. She advocated for transition credit frameworks modeled on Singapore, alongside bilateral government incentives to offset auditing costs.

    Financing Digital and Industrial Infrastructure

    Transition funding extends beyond factory equipment into heavy digital infrastructure. UOB arranged 7.3 billion baht in green credit for GSA Data Center 01, a joint venture between Gulf Development, Singtel and Advanced Info Service.

    The facility will run at 25.6 megawatts, engineered to LEED Gold green building standards. It serves as an operational template for commercial data centres running under severe power constraints across Southeast Asia.

    Longer-running bank programmes show similar measurable data. Since 2020, installations backed by the bank’s U-Solar programme in Thailand have cut more than 167,000 tonnes of carbon emissions across commercial and residential sites.

    The Compliance Test for Regional Trade

    Trade exposure will determine how quickly Thai manufacturers draw down transition lines. European supply chain audits and regional corporate procurement rules now mandate Scope 1 and Scope 2 emission disclosures from tier-two and tier-three component suppliers.

    For consumer brands and contract manufacturers across Bangkok’s industrial corridors, accessing low-cost capital requires audited energy baselines rather than high-level corporate pledges. The next test is how many mid-sized industrial borrowers convert initial energy efficiency loans into multi-year capital expenditure plans before regional carbon border rules take full effect.

  • Krungsri Targets 350 Billion Baht in Sustainable Finance as SME Transition Accelerates

    Krungsri Targets 350 Billion Baht in Sustainable Finance as SME Transition Accelerates

    Bank of Ayudhya completed the latest cycle of its business transition programme in Bangkok on Sept 16. The lender committed 350 billion baht in sustainable financing through 2030.

    Operating as Krungsri, Thailand’s fifth-largest commercial bank by assets evaluated transition roadmaps from local suppliers. It awarded five mid-sized companies for practical decarbonisation and circular economy projects.

    Held at The Okura Prestige Bangkok, the Krungsri ESG Minute of Changes gathered corporate participants from the bank’s training academy and awards programme. Krungsri runs the scheme to push commercial borrowers past broad net-zero pledges. The programme focuses on operational carbon cuts, waste conversion, and verified supply chain upgrades.

    Transition Roadmaps for Supply Chains

    Five commercial enterprises earned top honours after the bank evaluated plans to cut emissions and recover daily operational waste. The winners spanned food processing, retail property, agriculture, healthcare, and industrial recycling.

    In retail and commercial property, market operator Supavee Tumwattana Co restructured waste management across Yingcharoen Market. The business separated food waste, coffee grounds, orange peels, and used cooking oil into raw materials for commercial repurposing. That cut haulage volumes and municipal disposal costs.

    Industrial materials maker Mailaivijit Co developed ReFoam, a composite product manufactured directly from sawdust and discarded foam scraps. In food processing, S. Ruamthai Co redirected seafood byproducts into new product lines. The shift captured secondary revenue streams and eliminated disposal overheads.

    Agricultural supplier Thai Quality Starch Co built an integrated procurement system and distributed disease-free cassava planting stock to protect raw supply against crop loss. Meanwhile, Panapan Healthcare Co deployed commercial solar arrays. The installations cut grid power consumption and lowered operational emissions.

    Cross-Sector Scrutiny and Evaluation

    Shortlisted companies submitted transition strategies to a live pitching session before a multi-sector panel. The review board examined implementation viability, commercial competitiveness, policy alignment, and measurable environmental impact.

    Panel representatives came from the Federation of Thai Industries, the Thai Chamber of Commerce and Board of Trade of Thailand, Social Enterprise Thailand, the Department of Business Development, the Thailand Greenhouse Gas Management Organisation, the Office of SMEs Promotion (OSMEP), and Thammasat University.

    Technical training relied on corporate and advisory partners, including the Stock Exchange of Thailand, KPMG Thailand, the Board of Investment, Onnex by SCG, Schneider Electric, and Alto Tech. These specialists supplied data tools, energy management frameworks, and compliance audits. The tools helped participants structure viable capital expenditure plans.

    Krungsri President and Chief Executive Kenichi Yamato said: “Advancing sustainability is not simply about setting ESG targets. It is about turning transition plans into action and delivering tangible results, which requires collaboration across sectors.”

    Credit Allocation and Transition Risks

    Thai commercial lenders are shifting their approach from broad sustainability pledges toward rigorous project-level verification. For years, financial institutions across Southeast Asia marketed green credit facilities that mid-sized operators struggled to tap. Rigid reporting rules and vague return profiles blocked access.

    By integrating technical consultants and trade federations into the vetting process, the bank pre-qualifies suppliers for dedicated loan tranches. Kasikornbank and Siam Commercial Bank run similar programmes. Both rivals have rolled out tailored decarbonisation loans for exporters facing strict overseas supply chain audits.

    Execution remains the primary commercial risk for smaller suppliers. Rising capital expenditure on solar arrays, waste-sorting machinery, and certified agricultural stock must deliver clear margin gains. Trade volatility, raw material inflation, and changing European import rules continue to squeeze operating cash flows.

    For manufacturers, failure to decarbonise risks outright exclusion from multinational supply contracts. For lenders, unsecured transition lending requires close technical monitoring. Capital spending must translate into verified carbon cuts rather than balance-sheet stress.

    The Path to 2030 Targets

    Since 2023, Krungsri has run its sustainability academy and awards format annually. Over the past three years, the platform expanded from classroom instruction into an operational incubator for commercial and industrial banking clients.

    This initiative forms a core part of the bank’s domestic systemic banking mandate in Thailand. As the country works toward its 2050 Net Zero target, heavy industries, transport networks, and commercial supply chains face tighter regulatory demands to document emissions cuts.

    Borrowers will now deploy the awarded transition blueprints as the lender works toward its 350 billion baht sustainable finance target for 2030.