Is Your Company Green Loan-Ready? A Checklist for SG Organisations

Since the launch ofThe Singapore Green Plan 2030in February 2021, many Singaporeans have become more actively involved in accelerating the nation’s transition towards a net-zero emissions future. A number of organisation owners in the country, for instance, are incorporating sustainable initiatives into their company’s long-term strategies in hopes of aligning their operations with broader environmental goals—in particular by improving their energy efficiency, reducing waste, or adopting cleaner technologies.

To strengthen their sustainability efforts even further, companies can fund their green projects through green loans.Green loans for businessesare specifically intended to finance environmentally beneficial activities, and although they may share some similarities with business loans—specifically in terms of tenure and interest rates—their requirements aren’t quite the same.

These types of loans call for clear, measurable outcomes that demonstrate genuine environmental impact and accountability. As such, before applying for a green loan from a financial institution in Singapore, you’ll want to check if your organisation is adequately prepared to meet the expectations of green financing. Here’s a short, but substantial checklist you can refer to if you want to apply for financing that will help your organisation go green:

1) Do You Have a Well-Defined Green Project or Initiative?

Green loans aren’t distributed to just any green project or initiative. Lenders will only grant them to borrowers who have well-structured outlines of their projects, as this ensures that the financing will be used effectively and deliver genuine environmental benefits. Make sure that your green project is clearly articulated and outcome-oriented, as this will increase your chances of approval.

Issuers also look for well-defined plans that address an environmental objective in a measurable and verifiable way. This could involve infrastructure upgrades to reduce carbon emissions, investments in renewable energy, or the development of products or services that support your low-carbon transition. Proposals should also provide sufficient project details, such as implementation timelines, projected environmental impact, and an internal process for tracking progress, to assure a lender of your organisation’s preparedness and credibility.

In addition, having a well-thought-out proposal ensures that your project won’t be perceived as too broad or superficial—which could otherwise weaken its appeal to potential lenders. Be as specific as possible, and be realistic in your propositions.

2) Does Your Project Align with GLP’s Four Core Components?

Once you’ve clearly defined your green initiative, the next step is to assess whether it aligns with the internationally recognisedGreen Loan Principles (GLP).These principles, which aresupported by the Monetary Authority of Singapore (MAS), serve as a practical framework for ensuring that green loans deliver on their environmental promises.

Many lenders rely on these principles to evaluate whether a project meets necessary standards for environmental integrity. To ensure accountability and transparency, green loan issuers will want assurance that the funds will be used exclusively for the intended green initiative. They also expect the loan proceeds to be tracked and monitored conscientiously, with regular updates on how the project is progressing against its stated environmental goals.

A great way to build lender confidence in your organisation’s readiness is to structure your proposal around the four core components of GLP. These are: (1) use of proceeds, (2) process for project evaluation and selection, (3) management of proceeds, and (4) reporting. Aligning your project to reflect these components from the outset demonstrates that your company understands the governance expectations of green financing, and it also shows that you’re committed to following through on your environmental obligations.

3) Does Your Project Have Relevant Sustainability Certifications?

While certifications aren’t always mandatory, they often serve as third-party assurance that the project is genuinely green. In Singapore, lenders are more inclined to support initiatives that have been independently verified or certified by locally recognised environmental or sustainability standards. This is because certifications help validate that a project meets industry benchmarks for environmental impact, energy efficiency, or sustainable construction.

As such, relevant sustainability certifications can strengthen your green loan application. However, the type of certificate will depend on the nature of your initiative. For example, you might obtain certifications such as the Building and Construction Authority’s (BCA) Green Mark if your project involves new developments, retrofitting, or upgrades to a building infrastructure. On the other hand, if your initiative is focused on manufacturing, you may consider the Singapore Environment Council’s (SEC) Eco Manufacturing certification.

4) Is Your Organisation’s Financial Standing Strong Enough?

Environmental merit isn’t enough to ensure your success in securing green financing. Green loans are still loans, and as such, lenders must assess the creditworthiness of your organisation before they’re able to grant you one. Financial institutions need to ensure that you can manage your financial responsibilities without compromising the viability of your project. Thus, having a strong financial position gives banks confidence that you can meet your repayment obligations while executing your green initiative.

To determine whether your company is financially sound, you’ll want to review key financial indicators that could influence a lender’s perception of risk. These include your company’s cash flow, balance sheet health, and existing debt commitments. You should also assess your ability to sustain operations over the duration of the loan. If these metrics reflect stability and resilience, then your organisation may be deemed ready to handle the financial responsibilities that come with securing and managing a green loan.

Ultimately, green loans provide organisations in Singapore with the funds they need to bring their green projects or initiatives to fruition. Obtaining one, however, requires a more structured and strategic approach to ensure that the proposals are aligned with The Singapore Green Plan 2030’s goals.

Keep these key considerations in mind to help your organisation navigate the application process more confidently. Take the suggestions laid out in the checklist above to increase the likelihood of securing loans that will support your business’s green objectives and environmental commitments.