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- General Sustainability
How we’re helping businesses make more of their EcoVadis ESG rating
Fuelled by factors such as increasing customer demands, complex supply chains and evolving regulatory frameworks, businesses across sectors are increasingly recognising the importance of both embracing sustainable practices and demonstrably proving their commitment through credible third-party ratings.
That means that in today's rapidly evolving business landscape, sustainability ratings are relevant for many businesses – they can be a valuable tool to support on your sustainability journey, through gaining valuable insights into your business, benchmarking and improving performance over time, and meeting reporting requirements.
But ESG ratings can do much more for your business.
At HSBC UK, we have partnered with ESG ratings provider EcoVadis to turn ESG ratings into something even greater: a chance to unlock new lending and trade finance opportunities. Our partnership means that businesses who complete an EcoVadis ESG assessment could now access reduced interest rates as their EcoVadis rating improves in line with their agreed targets. Similarly, interest rates may increase if their EcoVadis rating declines.
Here’s how we’re doing it, with our HSBC UK Sustainability Improvement Loan.
Incentivising sustainability
When we launched the Sustainability Improvement Loan, our goal was simple: to make sustainable finance available and relevant to mass markets by standardising and reducing the cost of access, driving resilience and impact and linking the cost of finance directly to a company’s EcoVadis sustainability rating.
That’s exactly what we’re doing today.
First, businesses obtain an EcoVadis sustainability rating, an ESG score built through comprehensive assessments of performance across their activities.
Ranging from carbon reduction strategies to human rights policies, the EcoVadis rating is designed to reflect the unique context of each company, based on factors like industry, geography, and size. It also provides businesses with an action plan: a tailored roadmap for improvement with benchmark comparisons to their peers and detailed guidance on how to improve their sustainability rating year over year.
In turn, going through the process, putting the plans in place and measuring the business against them makes them eligible to link the cost of finance to their sustainability rating. As companies improve their sustainability rating over time in line with agreed targets, their financing costs decrease. Equally, if their sustainability rating declines, finance costs may increase. This incentivised structure aims to create a cycle of continuous improvement.
That's ultimately where the advantage of our partnership lies, linking sustainability performance to your financing through our lending and trade finance products.
It's a model that encourages businesses to bring responsibilities together across an organisation and really think about how sustainability is integrated in everything the business does.
Meeting businesses where they are
Many of the businesses we work with begin their sustainability journey often prompted by larger customers requesting transparency as part of their supply chain initiatives.
That’s something we want to reflect as part of our partnership.
Meeting companies where they are – and helping them get to where they want to be.
Want to know more about our Sustainability Improvement Loan? Book a meeting with one of our Relationship Directors today.
Lending is subject to status. Eligibility criteria and T&Cs apply
