Securities Times｜Implementation of China's First ESG Multi-indicator Linked Loan Transaction Responding to SSE's ESG Guideline

Translated from Securities Times

The reporter learned from SSE on March 19 that China's first ESG multi-indicator linked loan transaction responding to SSE's ESG guideline was officially implemented.

SSE attaches great importance to the development of ESG systems of listed companies. In recent years, it has issued multiple guiding documents around the disclosure of sustainability information by listed companies, including Guidelines No. 14 of Shanghai Stock Exchange for Self-Regulation of Listed Companies—Sustainability Report (Trial) and Guide No.4 for Self-Regulatory Supervision on Listed Companies of the SSE — Compilation of Sustainable Development Reports, to guide listed companies to integrate the concept of sustainability into their corporate strategic planning and business management. It is understood that SSE's relevant guiding documents require listed companies to establish a climate-related governance framework, assess climate physical risks and transition risks, and formulate greenhouse gas emission reduction targets and transformation plans.

Under the guidance of SSE, Industrial Bank Co., Ltd. has customized a loan plan for Trina Solar Co., Ltd., a listed company on the SSE STAR Market, based on the ESG governance characteristics of listed companies. Recently, Industrial Bank Co., Ltd. signed an ESG-linked loan agreement with Trina Solar Co., Ltd. to promote the company's practical implementation of core ESG issues such as climate governance, employee rights and interests, and corporate governance through market-oriented mechanisms, setting an important example for the capital market to serve the green transformation of the real economy.

Specifically, the loan plan creatively sets up three ESG-linked indicators: in the environmental dimension, it focuses on greenhouse gas emission intensity; in the social dimension, it focuses on the development of human resources; and in the governance dimension, it focuses on the structure of the Board of Directors. Through ESG-linked loans, loan interest rates are closely linked to the environmental performance, social responsibility, and corporate governance performance of borrowing companies. When the completion of corporate ESG indicators reaches the agreed standards, the financing costs of companies can be reduced, demonstrating the economic value of ESG management straightforwardly.

As a leading enterprise in the global photovoltaic industry, Trina Solar Co., Ltd. has not only actively responded to compliance requirements for disclosing greenhouse gas emissions, employee training's financial impact, and governance structure with the help of ESG multi-indicator linked business but also integrated cutting-edge tools such as climate adaptability scenario analysis and carbon footprint accounting into its corporate strategic layout.

According to industry professionals, this market-oriented mechanism not only encourages companies to deepen their ESG governance but also provides a replicable ESG governance paradigm for Chinese enterprises in the process of global energy transformation. Meanwhile, it also helps Chinese companies cope with ESG compliance requirements in the process of going global. This is highly consistent with the core goal of promoting listed companies to incorporate sustainability factors into long-term strategies and enhance corporate competitiveness specified in regulatory documents.

The above information is provided for reference purposes only and does not constitute investment advice.