MARC has assigned a “Gold” Sustainability Sukuk Assessment to Sime Darby Property Berhad’s (SDProp) Sustainability Sukuk Framework (the Framework). The Framework sets out the guidelines for SDProp’s ASEAN Sustainability SRI Sukuk Musharakah issuances under its RM4,500 million Sukuk Musharakah Programme.
MARC has determined that the Framework aligns to the core components of the ASEAN Sustainability Bond Standards, ASEAN Green Bond Standards and ASEAN Social Bond Standards, as well as, the SRI Sukuk Framework in the Securities Commission Malaysia’s (SC) Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework. The Framework sets out the use of the sustainability sukuk proceeds, process for evaluating eligible projects, and commitments pertaining to management of proceeds, proceeds allocation and impact reporting.
The proceeds from the issuance of ASEAN Sustainability SRI Sukuk Musharakah will go towards existing and/or future projects of a sustainable nature in line with SDProp’s 2030 Sustainability Goals and the United Nations Sustainable Development Goals (the UN SDGs). The eligible use of proceeds, as defined in the Framework, can be grouped into five broad categories:
- Pollution Prevention and Control
- Terrestrial and Aquatic Biodiversity Conservation
- Energy Efficiency and Climate Action
- Affordable Housing
- Socioeconomic Advancement and Empowerment
The eligible green projects will provide tangible environmental contributions through improved resource management and energy efficiency, and carbon emissions intensity reduction. The eligible social projects, meanwhile, will help expand affordable housing supply and support social and economic development by contributing to learning, local employment, as well as micro, small and medium enterprise (MSME) development.
The evaluation and selection process of eligible projects will involve SDProp’s business unit teams and various departments, led by its Corporate Sustainability team. Overall, MARC considers the process for the management of environmental and social risks of eligible projects to be sufficiently robust and aligned with market best practices.
The net proceeds from the issue of sustainability sukuk will not be credited to a segregated account but the use of proceeds will be tracked internally, and such monitoring will be integrated into SDProp’s annual reporting process. MARC notes that the process for the management of proceeds, as well as commitments on allocation and impact reporting are aligned with market practices.
A property developer with a 47-year track record in developing sustainable townships and communities, SDProp’s noteworthy signature sustainability initiatives in its townships include the promotion of urban farming within its townships, solar ready homes, homes with multigenerational features, energy efficient homes, and Malaysian rainforest biodiversity conservation. SDProp’s strong sustainability profile is supported by an effective governance structure and processes for measuring, managing and reporting of its sustainability impact.
The principal methodology used in this assessment is MARC’s Impact Bond Assessments (IBA) criteria published in July 2018, accessible from MARC’s official website at www.marc.com.my. The Impact Assessment is not a credit rating and is arrived independently of the credit rating process of the sukuk. SDProp’s pre-issuance external review report can be accessed here.
Milly Leong, +603-2717 2938/ email@example.com