In a significant move towards promoting sustainable development in Thailand, the International Finance Corporation (IFC) has invested $100 million in a sustainability-linked bond issued by Central Pattana Public Company Limited (CPN). This investment marks IFC’s first foray into a publicly listed bond in Thailand and aims to support Central Pattana’s ambitious environmental goals, including a substantial reduction in greenhouse gas emissions and the greening of its property portfolio.
A Milestone in Sustainable Finance
The issuance of Central Pattana’s first sustainability-linked bond represents a pivotal moment in the company’s journey towards sustainability. The bond, valued at 8 billion Thai baht, is designed to finance initiatives that will significantly reduce greenhouse gas emissions. Central Pattana has committed to a 40% reduction in absolute emissions by 2031, using 2019 as the benchmark year. This ambitious target aligns with the company’s broader commitment to creating a sustainable future for Thailand.
IFC’s investment is not just financial but also advisory. The organization will assist Central Pattana in accelerating its sustainability performance targets and greening its portfolio through IFC’s EDGE building certification. This combined support is expected to help Central Pattana achieve its goal of greening 20% of its property assets by 2030, which constitutes a significant portion of Thailand’s retail property market.
The successful issuance of this bond is a testament to Central Pattana’s dedication to sustainability. By linking borrowing costs to performance against sustainability targets, the company is incentivizing positive environmental change. This approach not only benefits the environment but also contributes to the growth of Thailand’s ESG bond market.
IFC’s Role in Promoting Sustainable Development
The International Finance Corporation, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. IFC’s investment in Central Pattana’s sustainability-linked bond is part of its broader strategy to promote sustainable development in Thailand. By supporting companies like Central Pattana, IFC aims to contribute to the country’s overall climate targets and promote sustainable growth.
Jane Yuan Xu, IFC Country Manager for Thailand and Myanmar, emphasized the importance of sustainability in IFC’s work. She highlighted that through sustainability-linked investments, IFC can make a significant impact on the country’s climate goals. This investment is expected to set a precedent for other companies in Thailand to follow, thereby accelerating the country’s transition to a greener economy.
The partnership between IFC and Central Pattana is a prime example of how sustainability-linked finance can mobilize capital for environmental initiatives. By linking financial incentives to sustainability performance, these instruments encourage companies to adopt more sustainable practices. This approach not only benefits the environment but also enhances the companies’ long-term financial performance.
The Future of Sustainability-Linked Bonds in Thailand
The successful issuance of Central Pattana’s sustainability-linked bond is likely to pave the way for more such instruments in Thailand. As companies increasingly recognize the importance of sustainability, the demand for sustainability-linked finance is expected to grow. These bonds offer a unique way to align financial incentives with environmental goals, making them an attractive option for companies committed to sustainability.
Central Pattana’s bond issuance is aligned with the Sustainability-Linked Bond Principles issued by the International Capital Markets Association. These principles provide a framework for the issuance of sustainability-linked bonds, ensuring that they meet high standards of transparency and accountability. By adhering to these principles, Central Pattana is demonstrating its commitment to best practices in sustainable finance.
The success of this bond issuance is also a positive sign for the broader ESG bond market in Thailand. As more companies follow Central Pattana’s lead, the market for sustainability-linked bonds is expected to expand, providing more opportunities for investors to support sustainable development. This growth will be crucial in helping Thailand achieve its climate targets and transition to a greener economy.
