MARC Ratings Berhad (MARC Ratings) has assigned a “Gold” Sustainability Sukuk Assessment to the Sustainability Sukuk Framework (SSF) of Point Zone (M) Sdn Bhd (PZSB), a wholly-owned subsidiary of KPJ Healthcare Berhad (KPJ Healthcare).
This assessment reflects the highly impactful combination of green and social projects or activities that the proceeds raised from the issuance of Sukuk are expected to fund under the SSF. The SSF is also aligned with the core components of the ASEAN Sustainability Bond Standards, ASEAN Green Bond Standards and ASEAN Social Bond Standards (collectively the ASEAN Standards), the Securities Commission Malaysia’s Sustainable and Responsible Investment (SRI) Sukuk Framework as well as the International Capital Market Association’s Green Bond Principles, Social Bond Principles and Sustainability Bond Guidelines 2021 (collectively the ICMA Principles). In addition, KPJ Healthcare’s sustainability performance also provides a reasonably high assurance of sustainability implementation capacity and performance, particularly with regard to the environmental, social, and corporate governance (ESG) risk management of eligible projects and activities.
In line with corporate-level environmental and social commitments, the seven eligible social and green project categories outlined by the SSF will help the KPJ Healthcare Group mitigate transition and long-term sustainability risks and seize potential opportunities, in addition to advancing the United Nations’ Sustainable Development Goals, specifically 3, 4, 5, 6, 7, 8, 9, 10, 12, and 13. The social project categories address specific societal issues, such as access to healthcare, empowering underprivileged communities and small and medium enterprises (SMEs), including women-owned SMEs. Alongside this, the green project categories will support KPJ Healthcare’s commitment to reduce the environmental impact of healthcare.
A significant proportion of projects under the “Access to Essential Services” social project category will reside outside the four walls of the hospital and will contribute towards improving primary healthcare access which is increasingly central to the achievement of universal health coverage. This social project category and its subcategories will not only help KPJ Healthcare expand its healthcare capacity but also provide individuals and communities with comprehensive, coordinated, and quality care to stay well in their communities. Other potentially positive outcomes that will be generated by the SSF’s social project categories include equitable access to education, employment and business opportunities, as well as the promotion of employment opportunities, decent work and social inclusion. A wide range of green projects in the three main areas of energy, waste, and water, are set out in the SSF to support KPJ Healthcare’s commitment to improve the environmental sustainability of its operations by increasing its energy and water efficiency as well as effective management of its waste streams.
The net proceeds from the issuance of Sustainability Sukuk will be managed on a portfolio basis in accordance with the process for Project Evaluation and Selection set out in the SSF, led by KPJ Healthcare’s cross-functional Sustainability Working Committee. The allocation of proceeds and the eligible asset portfolio will be tracked internally, and such monitoring will be integrated into KPJ Healthcare’s annual reporting process. MARC Ratings notes that the process for the management of proceeds, as well as commitments on allocation and impact reporting, are aligned with market practices.
KPJ Healthcare operates the largest network of private hospitals in the country with 29 specialist hospitals providing a comprehensive range of specialist medical services throughout Malaysia. KPJ Healthcare has drawn up a Three-Year Sustainability Roadmap (2023 through 2025) with enhanced and new ESG initiatives aimed at promoting healthy communities and holistic care of patients, fostering its people, protecting the environment, and upholding good governance.
The principal methodology used in this assessment is in accordance with MARC Ratings’ Impact Bond Assessment criteria published in December 2019 and can be accessed at MARC’s corporate website at www.marc.com.my. PZSB’s pre-issuance external review report can be accessed here.