HSBC Holdings and Temasek Holdings have, on Sept 30, announced a partnership that’s dedicated to sustainable projects with an initial focus on Southeast Asia.
The partnership was made as part of both parties’ efforts to reduce climate change.
Through the partnership, HSBC and Temasek will invest up to a total of US$150 million ($203.9 million) to fund loans.
The ambition, according to both parties, is to build a pipeline of projects to scale, with the platform dispensing over US$1 billion of loans within five years.
The platform will be based in Singapore.
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HSBC and Temasek will work alongside the platform’s initial strategic partners, Asian Development Bank (ADB) and Clifford Capital Holdings (CCH), in the initial phase.
ADB will provide various forms of assistance to the platform, including technical assistance and project development expertise.
CCH will provide its project finance expertise as well as ongoing operational mid and back office support to the platform.
According to the joint statement, there is a “significant funding gap” for sustainable infrastructure in Asia. Many infrastructure projects in the region face “varying degrees of barriers to bankability”, it adds, in which private capital can play a unique role in bridging the gap.
A large portion of the platform’s loan portfolio will target marginally bankable, sustainable infrastructure projects, providing project development expertise and blended finance solutions where necessary.
The platform will apply internationally recognised environmental, social and governance (ESG) practices, including the FAST-Infra Sustainable Label to the extent applicable.
It will measure sustainability outcomes through the loans provided.
In addition, the platform will target renewable energy and storage, water and waste treatment and sustainable transport to help meet carbon reduction targets.
“This innovative partnership aims to tackle some of the biggest barriers to financing sustainable infrastructure where it’s needed the most. Neither private nor public sector can close the financing gap alone – but by working with Temasek, the Asian Development Bank and Clifford Capital, we can deploy significant amounts of blended finance for projects in Southeast Asia that would otherwise go unfunded,” says Noel Quinn, group CEO of HSBC.
“Collaborations matter in the fight against climate change, and this partnership provides an impactful model for others to follow,” Quinn adds.
“As an investor committed to sustainability at our core, we are keen to explore innovative solutions to address critical infrastructure needs especially in emerging markets in Asia, that will contribute to the transition to net zero. Public funding alone will not cover the scale of climate change mitigation and transition required across Southeast Asia,” says Dilhan Pillay, chief CEO of Temasek International.
“By joining forces, we can catalyse our capital, multiplying impact and scaling to meet the opportunities. Partnerships like this demonstrate Temasek’s commitment to a spectrum of sustainable solutions, and highlight the urgency of action required to get us all to net zero.”