ESR Secures Sustainability-Linked “Green” Loan For Hong Kong Data Centre Project

Asia-Pacific real estate manager ESR Group (ESR) with support from Hong Kong power company CLP Power Hong Kong (CLP), has closed the first Sustainability-Linked Loan (SLL) in Hong Kong for a brown field data centre project.

The HK$1.6 billion SLL will be used to fund the conversion of a building in Kwai Chung, one of the major data centre clusters in Hong Kong, into the modern and sustainable ESR Kwai Chung Data Centre HK1 which has a design IT power load of 21.3 megawatts.

ESR acquired the building in 2021 and signed a memorandum of understanding (MoU) with CLP Power in 2022 on green initiatives for future data centres and logistics centres in Hong Kong and the Greater Bay Area.

The five-year secured, committed facility has a tiered incentive mechanism where ESR will be entitled to an interest reduction when the project’s sustainability targets are achieved. ESR is targeting data centre tenants who have strong sustainability-related credentials to rent the development.

CLP Power is providing energy audit and advisory services to ESR to formulate the Key Performance Indicators of the SLL. These include sustainable features such as a diesel-generator-free construction site and a green wall in the façade.

In support of ESR’s efforts to further strengthen its Environmental, Social and Governance (ESG) commitments, Crédit Agricole CIB acted as the Sole Sustainability Advisor and Coordinating Bank, and SMBC and UOB acted as Sustainability Agents.  All three lenders are also Mandated Lead Arrangers.

To date, ESR Group has closed a total of seven SLLs with approximately US$4 billion, as it continues to integrate ESG into all aspects of its financial management, operations and development.

CLP Power Managing Director Mr Joseph Law said, “This project is a significant milestone in the collaboration between CLP Power and ESR towards decarbonisation. By using a sustainability-linked loan to create a hyperscale data centre, we hope it can serve as an example to promote environmentally friendly practices and the development of green buildings.”

Ricky Ng, Head of Wholesale Banking, UOB Hong Kong, said “The world is undergoing an exponential growth in the demand for data centres, fuelled by advancements in technology and the proliferation of digitalisation. As the reliance on data centres continues to increase, it is important for us to prioritise sustainability in this sector.”