Siam Commercial Bank Public Company Limited (SCB) and Minor International Public Company Limited (MINT) have strengthened their commitment to sustainable business development with a recent deal on an ESG-linked interest rate swap, whereby rates offered for hedging derivatives go in line with each client’s environmental, social, and governance (ESG) performance, improving their financial costs. This progress follows the success of the Thai Overnight Repurchase Rate (THOR)-based derivatives introduced last year. A set of criteria for the ESG-linked interest rate swap covers the client’s status in the Dow Jones Sustainability Index (DJSI), corporate governance (CG) score given by the Thai Institute of Directors, and performance in reducing single-use plastic, resonating with an international context requiring every party’s participation in reducing global warming and promoting a balanced world for a sustainable future.
SCB Executive Vice President and Head of the Financial Markets Function Mr. Patrick Poulier said that among recent global trends is sustainable business practices whereby the environmental, social, and governance (ESG) performance of a company is widely seen as a factor in business and investment analysis and decision making.
SCB’s business sustainability is based on a strategic framework with three main pillars: Sustainable Finance, A Society of Value, and An Environment for the Future. The bank has actively promoted the sustainable business concept among its clients through financial products and services in financial and capital markets. This is a major step in adding ESG value for clients to benefit from their commitment to doing good things for society and the world.
SCB and MINT have now introduced an ESG-linked interest rate swap, whereby rates offered for hedging derivatives go in line with each client’s environmental, social, and governance (ESG) performance. This is a further step adding more value to the THOR-based derivatives deal last year, as it will help boost market liquidity to fully support the adoption of THOR-based products. MINT has been successful with ESG performance as part of its business conduct, and this is a good opportunity for MINT to enjoy the financial benefits SCB has to offer, given that ESG performance is achieved through mutual agreement. It is hoped that this move will help raise ESG awareness among local businesses with direct and indirect benefits they can gain. SCB is ready to further develop other ESG-linked derivatives to cater to business needs across sectors.
MINT Chief Financial Officer Mr. Brian James Delaney commented “Even though the COVID-19 pandemic had a significant impact on our hotel and food operations, we have adapted and maintained our sustainability practices and standards. We believe that a focus on ESG will help strengthen our businesses in the long run and make this world a better place. It is a great delight that SCB has recognized MINT’s continuous commitment and dedication – from the THOR-based swap deals to the ESG-linked interest rate swap this time, which is believed will have a positive impact on the company’s financial costs. MINT is committed to striving to ensure that the company’s ESG performance goals meet SCB’s criteria. The company encourages local business entities to raise their ESG awareness for the sustainability of their own business and stakeholders at large, since this global trend is sure to have increasing influence on doing business in the future. This deal between MINT and SCB illustrates the fact that ESG performance not only benefits society and the environment, but also has a beneficial effect on corporate financial costs.”