The proliferation of sustainable finance products continues, both by region and products. Global financial services firm HSBC and Vancouver-based developer Concert Properties announced the first green loan in Canada.
Similar to green bonds, green loans are debt financing tools that enable the borrower to invest in projects that provide clear environmental benefits, subject to specific criteria regarding use and management of proceeds, and annual reporting requirements.
Canada’s first green loan, provided by HSBC Bank Canada is a conversion of a $71.5 million construction loan, with proceeds going towards the development of the Tapestry at Victoria Harbour development. It was converted to a green loan based on the strong green attributes of the building project including its expected lower carbon and energy footprint versus a comparable building.
Tapestry at Victoria Harbour is an active living community comprising for-sale condominiums and residential rental suites, along with supporting amenity and service space, and a small retail component. The development is projected to use 33% less energy than a comparable building and have an overall energy use intensity of 118 Kwh/sqm/yr. This intensity is commensurate with ‘Step Three’ of the ‘BC Energy Step Code’. Concert is also targeting certification under the Canada Green Building Council’s Leadership in Energy and Environmental Design (LEED) at the ‘Gold’ level for this building.
Concert recently developed a Sustainability Framework that lays out its plan for the next 30 years to make the company a leader in sustainable buildings, including aggressive carbon emissions reductions. The company has more than 20 buildings that have achieved LEED certification and/or Tier-2 under the Toronto Green Standard, or Step-3 under the Province of B.C. Energy Step Code.
Brian McCauley, President and CEO, Concert Properties, said:
“Tapestry at Victoria Harbour demonstrates our commitment to quality, sustainability and creating communities that inspire and enhance the wellness of an active aging resident. We are dedicated to making a positive contribution to the economy, society and the environment. We are pleased to be selected for HSBC’s Green Loan program. It recognizes Concert’s commitment to achieving greater sustainability in our portfolio.”
In response to strong demand for sustainable finance products, HSBC Bank Canada introduced its green finance principles in Canada late last year, including HSBC Green Loans, that meets the requirements of the Loan Market Association’s Green Loan Principles.
The principles outlined activities that will be eligible for green loan financing, including:
- Renewable energy, including storage and smart grids;
- Pollution prevention and control, including reduction of air emissions and greenhouse gas control;
- Clean transportation;
- Climate change adaptation;
- Sustainable water and wastewater management;
- Sustainable management of living and natural resources and land use;
- Waste prevention, reduction, recycling; waste to energy; products from waste.
HSBC stated that it has been at the forefront of sustainable financing and is the top underwriter of green, social and sustainable bonds globally. In 2017, the bank committed to provide and facilitate $100bn of sustainable financing by 2025 to clients to develop or install clean energy and lower-carbon technologies.
HSBC Bank Canada facilitated over $1bn in sustainable financing in 2019, including participating in $6.4bn of green and sustainable bond transactions for Canadian clients.
Linda Seymour, Head of Commercial Banking, HSBC Bank Canada, said:
“We are proud to help our long-standing client, Concert Properties, extend their sustainability leadership into the area of finance and pioneer the first green loan in Canada. Our customers are becoming increasingly focussed on ESG issues, and we are committed to offering them products that help them invest in creating a lower carbon economy.”