Ant Group, an affiliate of Chinese tech giant Alibaba , has completed a sustainability-linked loan (SLL) agreement with BNP Paribas , marking the first SLL deal in China’s technology sector, as reported by Bloomberg on May 16. The loan, offered as a revolving credit line, has a variable interest rate depending on Ant Group’s progress towards its sustainability goals. Specifically, Ant Group will be checked annually to assess its adherence to targets on renewable energy consumption, donations to environmental protection and biodiversity conservation, and carbon neutrality. If the targets are met, the SLL’s interest rate will be lowered accordingly.

SLLs aim to facilitate and support sustainable economic activities and growth by tying their terms to the borrowers’ ESG and sustainability performance. The SLL offer suits BNP Paribas, as the bank announced in April that it is on track to achieve carbon neutrality across its value chain by 2030. In 2021, the issuance of SLLs surged 300% globally from the previous year to more than USD700bn, more than tripling the previous record. In recent years, SLLs have surged quickly in the Asia-Pacific, with Australia and Singapore as the two top markets currently. Last year, the borrowing of SLLs by companies in Asia excluding Japan reached USD52.6bn, more than six times that in 2020.

Sources:

https://www.bloomberg.com/news/articles/2022-05-16/ant-completes-china-tech-sector-s-first-esg-linked-loan-deal?srnd=premium

https://www.finextra.com/newsarticle/40249/bnp-paribas-to-provide-carbon-linked-credit-line-to-ant-group

https://www.businesstimes.com.sg/companies-markets/ant-group-completes-china-tech-sectors-first-esg-linked-loan-deal

https://www.refinitiv.com/perspectives/market-insights/sustainable-finance-continues-surge-in-2021/