New fund to offer one per cent cashback to small and mid-sized businesses taking out loans to fund green improvements

HSBC UK has this week announced the launch of a £500m Green SME Fund designed to help small and mid-sized enterprises ramp up investment in emissions-saving projects.

The fund, which forms part of the banking giant’s wider commitment to provide between $750bn and $1tr of financing and investment over the next 10 years, will offer loans to businesses with a turnover of less than £25m.

The bank said it would offer one per cent cashback on loans starting from £1,000 that help SMEs invest in a range of green activities. To qualify for the cashback, evidence must be provided that the use of the loan proceeds meet HSBC’s Eligible Criteria for Green Activities, which have been independently reviewed by consultancy Sustainalytics.

The new fund is accompanied by a Sustainability Assessment Tool that provides insights and resources to help smaller businesses transition towards net zero emissions.

The launch comes as SMEs face growing pressure from both consumers and corporate customers to develop net zero emissions strategies, as larger blue chips look to deliver on pledges to build net zero emission supply chains. Investments in energy efficiency upgrades have also become considerably more attractive in recent months as soaring gas prices have started to impact many businesses’ bottom lines.

The official launch of the new fund from HSBC follows an announcement at the COP26 Climate Summit in Glasgow late last year trailling the plan. Speaking at the time, HSBC UK CEO, Ian Stuart, said the fund aimed to address one of the biggest challenges smaller firms face when developing decarbonisation strategies.  

“Companies of all sizes and sectors have a role to play in the journey to net zero, however the sustainable finance market has been predominately focused on larger corporations,” he said. “It’s critical that access to funds isn’t a barrier for small and medium sized businesses working to achieve lower carbon emissions.

“We want to help businesses seize the opportunities and growth potential that environmental sustainability offers and the fund, along with our new and expanding suite of tools and resources, will make it easier for small businesses to take practical steps to cut their emissions and help their customers to cut theirs too.”

The bank this week showcased a project with Manchester-based David Luke Schoolwear, which used a six-figure funding package from HSBC to install over 1,000 solar panels at its headquarters in central Manchester, leading to a significant reduction in energy costs and carbon emissions.

In related news, HSBC Asset Management (HSBC AM) today announced that it has acted as the sole debt investor in a $48.2m US private placement for the refinancing of a solar and wind portfolio of assets in Chile sponsored by InterEnergy. The portfolio comprises 12 solar PV projects and two windfarms, with a total capacity of 60 megawatts (MW), all of which are fully operational.

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