OCBC Bank has developed a framework that makes it simpler and less costly for Singaporean small- and medium-sized enterprises (SMEs) to access sustainable financing of up to 20 million Singaporean dollars (S$20 million - US$15 million) to accelerate their sustainability plans.

The OCBC SME Sustainable Finance Framework outlines solutions including green letters of credit (L/Cs).

Green L/Cs

Infrastructure and renewable energy developer, Acciona, said it arranged the first green L/C in the European financial system with CaixaBank for a total of US$129 million.

The Spanish company said the L/C qualifies as "green" because it is linked to a sustainable development project aimed at mitigating climate change.

OCBC's framework

The sustainable financing provided through the OCBC SME Sustainable Finance Framework can be in the form of solutions such as green L/Cs as well as green loans and green guarantees.

The financing framework has eight eligible green project categories: clean transportation; eco-efficient and/or circular economy adapted products, production technologies and processes; energy efficiency; green buildings; environmentally sustainable management of living natural resources and land use; pollution prevention and control; renewable energy, and sustainable water and wastewater management

Benefits

According to OCBC, SMEs will benefit from the framework because they will no longer need to spend time and resources developing bespoke sustainable finance frameworks prior to applying for sustainable financing.

The new framework was developed with the support of the Monetary Authority of Singapore's Green and Sustainability-Linked Loan Grant Scheme.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.