The United Overseas Bank (UOB) has become the first bank in Asia to make sustainable financing more accessible to companies contributing to the creation of smart cities.

The bank has launched the Smart City Sustainable Finance Framework (SCSFF), supported through the Monetary Authority of Singapore’s Green & Sustainability-Linked Loan Grant Scheme.

The framework sets out the criteria the bank’s corporate and institutional clients must meet when accessing a range of products, from green or sustainability-linked loans and trade finance facilities to other sustainable banking products. These criteria include requiring the company to have a clear sustainability strategy and objectives, to achieve their sustainability performance targets and to use the proceeds to further their sustainability agenda.

Under the framework, business must demonstrate how their activities promote a better quality of life for residents through the use of renewable energy, green building construction, improved energy efficiency, green transportation, sustainable water and waste management, and/or climate change adaptation. UOB will monitor the company’s management of loan proceeds and the environmental and social impact of its business activities annually.

With the SCSFF, companies committed to building sustainable and smart cities can apply for sustainable financing without having to develop their own financing framework, which can take time and resources. This means they can focus their resources on contributing to a better environment.

“The United Nations estimates that US$2.5tn is required annually for developing countries to bridge the financing gap in achieving the SDGs by 2030,” said Frederick Chin, head of group wholesale banking and markets at UOB. “Financial institutions can and must play a part, together with governments and businesses, to help channel more funds to sustainable development. Such efforts will go a long way in making the cities of Asia more sustainable and liveable.”

He said UOB was committed to balancing opportunity with responsibility and helping businesses across the region advance responsibly through sustainable financing.

“Under our SCSFF, we will be able to support the sustainability efforts of more companies from various sectors, working with them closely for the development of sustainable and smart cities,” he said.

The Carbon Trust, a consultancy specialising in climate and environment-related advisory and assurance services, provided a second party opinion on the SCSFF in accordance with the green loan and the sustainability linked loan principles issued by the Loan Market Association.

“Smart cities are essential to help municipalities and countries manage and rebound from the Covid-19 pandemic,” said Lau Xin Yi, green finance lead at the Carbon Trust. “Digital technologies will play a growing role in delivering key public services and supporting economic activities while promoting environmentally-friendly practices.”

She said the framework was a “timely and strategic initiative that recognises the multi-faceted needs within smart cities while responding to different financing needs of stakeholders in the form of green loans and sustainability-linked loans”.

The framework is an expansion of the UOB Green Infrastructure Financing Framework, which the bank launched in 2019 to provide sustainable financing to companies in the infrastructure sector. The bank also has the Real Estate Sustainable Finance Framework that guides the financing that it provides to its clients in support of sustainable buildings. This framework was the first lending framework for the sector by a Singapore bank when it was launched in October 2019.

UOB has a global network of more than 500 offices in 19 countries and territories in Asia Pacific, Europe and North America. Since its incorporation in 1935, it has grown organically and through acquisitions. In Asia, UOB operates through its head office in Singapore and banking subsidiaries in China, Indonesia, Malaysia, Thailand and Vietnam, as well as branches and representative offices across the region.