December 23, 2021 | 00h00
MANILA, Philippines – Deutsche Bank and global consumer credit provider Home Credit Philippines have signed the country’s first environmental, social and governance (ESG) loan.
Kamran Khan, Head of ESG Asia-Pacific at Deutsche Bank, said this pioneering transaction reflects the shift from consumer lending in Asia to responsible and sustainable lending.
Khan said the partnership with Home Credit is also changing the ESG landscape by demonstrating that beyond environmental considerations, funding could also be meaningfully linked to social impact goals with a strong focus on financial inclusion.
“The parameters of the loan follow and prompt Home Credit to provide loans to new entrants to the market, which are usually women and young adults who are getting first-time credit. This is an emerging and important area of ESG, particularly in Asia; both the need and the opportunity to have an impact are important, ”said Khan.
The transaction represents an important step in the development of ESG financing with solid objectives linked to “S” or social considerations.
The short-term loan facility establishes clear metrics and key performance indicators (KPIs) with respect to ESG considerations, as well as concrete targets for the metrics Home Credit is committed to achieving over the life of the loan. .
Key performance indicators focus on expanding access to credit to underserved communities in the Philippines, including women and first-time borrowers, and increasing the supply of education programs financial in the Philippines.
The deal also has goals around Home Credit’s digitization efforts, committing them to providing at least 60% of their loans through digital channels, in order to provide a higher level of transparency to customers, to enable rates and fairer loan terms for clients, regardless of their economic or social background.
Additionally, KPIs track data to confirm Home Credit’s commitment to protecting the privacy of its customers’ data and ensuring it is used for the intended purpose.
The indicators would be measured and verified by an independent third-party advisor to ensure that the loan complies with the lending principles related to sustainability of the Asia Pacific Loan Market Association.
Director of mortgage finance, treasury, investor relations and mergers and acquisitions, Jean Lafontaine, said the transaction reflects the confidence the partners have in his work to drive the ESG program.
“As a company, we are constantly looking for innovative financing solutions and this is our very first loan linked to ESG criteria at Group level and a milestone. ESG is not something new for Home Credit Group and is part of our company’s DNA, ”added Lafontaine.
Lafontaine said Home Credit continues to offer greater financial inclusion in markets like the Philippines.
“With the KPIs associated with this loan facility, we are even better positioned to continue to provide fair and transparent access to financial services for the communities where we operate,” said Lafontaine.