HSBC Thailand has launched the country's first "green deposits" with petrochemical manufacturer Indorama Ventures (IVL) and 7-Eleven convenience store operator CP All, with the undisclosed deposit funds used for green projects such as renewable energy infrastructure and energy-efficient buildings.
The deposits allow companies to bolster their environmental bona fides by investing their surplus cash in projects deemed by HSBC as environmentally beneficial.
The companies then use the deposits as evidence of improving their environmental, social and governance score, offsetting activities deemed harmful to the environment and society.
IVL and CP All are complicit in Thailand's plastic waste crisis, as the kingdom is the 10th largest contributor of plastic waste in the world.
CP All's parent company, Charoen Pokphand Group, has been named Thailand's top plastic producer for two years in a row by Greenpeace, based on a survey of plastic trash found across the country.
IVL is one of the world's largest plastic producers, although it earmarked US$1 billion to invest in its recycling business from 2019-2023.
"A green deposit is in a designated purpose account. Our commitment to our clients is the money must be invested in green projects, including renewable energy, energy-efficient projects, sustainable waste management or green transport, just to name a few," said Jonathan Teh, head of global liquidity and cash management at HSBC Thailand.
"It must go into that framework, which is governed by our sustainability committee that looks across the whole HSBC group and its assets and liabilities. This money must be used for a green loan, unlike a conventional deposit."
The interest rates of green deposits are negotiated between the bank and the corporation, but Mr Teh said the focus of the product is to improve depositors' environmental, social and governance scores to help them meet internal sustainability goals.
"If you take the average corporation today, it may not have the means to invest in a green project itself because it does not have a mandate for it from investors," he said.
"We facilitate this investment, allowing a company to invest in a green project indirectly without having to administer it themselves."
Green deposits are part of a broader initiative at HSBC to provide green financial products, a growing trend in an industry attempting to direct investment funds towards development projects that are meant to improve the environment and cut carbon emissions.
A recent poll by HSBC of 4,131 companies from 16 Asia-Pacific countries showed 92% of corporates feel increasing pressure from their customers to become more environmentally sustainable.
"This green deposit is an exciting milestone for HSBC as the first financing solution of its kind in Thailand," said Kelvin Tan, chief executive of HSBC Thailand.
"It underpins our commitment to play a meaningful part in Thailand's transition to a greener economy and to drive sustainable long-term growth in the market. We are thrilled to support local corporations focusing more on their sustainability strategy and turning their green ambitions into real action."