Sustainable Fitch Assigns the Housing and Development Board an ESG Entity Rating of ‘3’

Sustainable Fitch-London-23 February 2023: Sustainable Fitch has assigned the Housing and Development Board (HDB) an ESG Entity Rating of ‘3’. We also evaluated its inaugural green bond, which received an ESG Framework Rating of ‘2’ and a combined ESG Instrument Rating of ‘3’. The ESG Ratings were not solicited by the agency and were assigned by Sustainable Fitch.

The HDB is a statutory board in Singapore, under the Ministry of National Development, that is responsible for the development of public housing towns and flats for buyers who are Singaporean citizens and permanent residents. Its remit serves an important social purpose in Singapore, and has resulted in a high home ownership rate of about 88% in 2020. In addition to its key function of developing and maintaining flats for ownership, the HDB also provides mortgages for homebuyers, rental flats for selected tenants, and commercial facilities within public housing towns.

We view some of its business activities as positive from a social perspective due to the HDB’s key consideration of maintaining affordability for buyers in property pricing, its favourable terms in mortgage lending that reduce down payment requirements compared to retail lenders, as well as the public rental scheme providing subsidised housing for low-income individuals.

The overall environmental view of the buildings sector is negative due to the construction activities and the high levels of resource consumption throughout a building’s lifespan. The HDB has partially mitigated the environmental impact associated with its activities by following best practices under the Building and Construction Authority (BCA) Green Mark certification scheme, though this constitutes a minority of portfolio under management, which includes all public housing flats built from 1960 onwards.

The agency also has numerous initiatives contained in its Sustainable Development Framework and “Designing for Life” roadmap. This includes the 10-year HDB Green Towns Programme, launched in 2020, to improve the environmental performance of public housing towns and flats, which aims to reduce the energy consumption by 15% by 2030 from a 2020 baseline.

However, it does not yet publicly disclose data on environmental and social metrics, or information on how executive remuneration is decided. This lags behind the general practice of the labelled bond market, which features issuers publishing comprehensive annual ESG disclosures that are aligned to international disclosure standards.

The HDB will allocate its green bond proceeds to the ICMA category of green buildings. These will be used for new buildings that achieve a minimum certification level of BCA Green Mark GoldPLUS, indicating that projects supported by the bond should have a high level of environmental performance. It has further committed to financing at least 50% new projects, which enhances the additionality of impact brought by the transaction. However, the annual reporting will be aggregated by portfolio, which limits the ability to identify specific impact associated with individual transactions.

The ESG Ratings for the HDB were assigned in September 2022 using information available at that time.

GENERAL INFORMATION ABOUT SUSTAINABLE FITCH RATINGS AND OTHER PRODUCTS

Sustainable Fitch's ESG Ratings offer a global solution to assess Environmental, Social and Governance performance of all asset classes at an entity, framework and instrument level, helping the ESG financial community make better, informed decisions. It has developed a modular analysis framework, enabling it to provide a Second Party Opinion (SPO) and a monitored suite of ESG Ratings including Entity Rating, Framework Rating and Instrument Rating.

ESG Ratings indicate an entity’s performance, commitment, and integration of environmental and social considerations into its business, strategy and management, and the effectiveness of governance. The ratings are provided on a scale of ‘1’ to ‘5’, with ‘1’ being the best and ‘5’ the worst.

Contact:

Leanne Lim
Senior Analyst – ESG Ratings
+44 20 3530 1484
leanne.lim@sustainablefitch.com
Sustainable Fitch
30 N Colonnade, Canary Warf
London E14 5GN

Antoine Corbin
Senior Director – ESG Ratings
+44 20 3530 1339
antoine.corbin@sustainablefitch.com

Media Relations: Peter Hoflich, Singapore, Tel: +65 6796 7229, Email: peter.hoflich@thefitchgroup.com

Additional information is available on www.sustainablefitch.com


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