“Upgrading the sustainability framework of the MCB in line with international standards”

The Mauritius Commercial Bank Limited (MCB) made a significant stride in its commitment to Environmental, Social, and Governance (ESG) responsibility by signing a USD 400 million Sustainability-Linked Syndicated Term Loan last December. In a detailed conversation with BIZWEEK, Mrs. Anbar Jowaheer, Head of Financial Institutions & Syndication at MCB, shed light on this landmark initiative. She underscored that a key objective for the year is to match the bank’s sustainability framework with international standards. This includes obtaining a Second Party Opinion on the framework. “We perceive this as a gateway to further our sustainability journey,” she said.

Diversifying funding sources is an important risk management strategy for banks across the world.

Last December, the Mauritius Commercial Bank Limited signed a USD 400 million Sustainability-Linked Syndicated Term Loan, demonstrating its commitment to ESG responsibility. Can you walk us through the process that led to this initiative?

MCB articulated its sustainability philosophy in 2018, when it launched its ‘Success Beyond Numbers’ agenda. As a responsible banking group, sustainable development stands at the heart of our growth. Numerous initiatives had already been launched by the Bank recently, such as the ‘Lokal is Beautiful’ and ‘Klima’ conferences, and the MCB Sustainable Loans deployed via its Rs 10 billion commitment to sustainable finance. To pursue that journey, we felt it was important for us to translate it on the international market, hence this debut syndicated sustainability-linked loan.

According to an MCB communique, the sustainability KPIs align with the Group’s ESG strategy, focusing on Sustainable Financing and Gender Diversity. Could you elaborate on this?

Indeed, Sustainable Financing and Gender Diversity are key pillars of our ESG strategy. Through sustainable financing, we aim to support investment into environmentally friendly projects, with the aim of transitioning economies to a lower carbon footprint. Such categories of projects include both climate mitigation and adaptation, such as renewable energy, energy efficiency, green buildings, and terrestrial and marine aquatic biodiversity, to name a few. On the other hand, gender diversity and women empowerment have always been a priority to MCB, and we are committed to improving the ratio of women occupying senior roles within the organisation.

The deal was launched at USD 400 million, and was well received in the syndicated loan market, with USD 849 million of commitments received, representing an oversubscription of 1.12 times. MCB Ltd’s CEO, Mr Thierry Hebraud, stated that this oversubscription reflects the investors’ understanding and strong support for the bank’s African strategy, and acknowledges the Bank’s efforts in driving its responsible and sustainable agenda. Could you provide more details about the bank’s African strategy and how it relates to the Sustainability-Linked Syndicated Term Loan?

The Bank’s African strategy remains in line with our ongoing activities in the financial institutions, global and international corporates, and specialised lending franchises spanning various sectors and structures. This Sustainability-Linked Syndicated Term Loan is aligned with international market standards, and sets key performance indicators that MCB aims to achieve to benefit from a lower funding rate, thereby enabling the organisation to remain competitive.

The facility also attracted 24 banks and investors from Europe, the Middle East, and Asia. What has been the primary motivation and interest for these international investors and banks?

As Africa’s only investment-grade commercial bank, MCB has built a strong franchise based on its solid credit metrics. The Bank enjoys privileged relationships with global banks across continents, as evidenced by our previous syndicated loans in June 23 or our debut Eurobond in April 2023. By incorporating sustainability into the funding initiatives through this syndicated sustainability-linked facility, banks and investors were even more convinced to support our responsible growth strategy.

How urgent and important is it currently to diversify funding sources and incorporate sustainability into funding initiatives?

Diversifying funding sources is an important risk management strategy for banks across the world. As a prudent bank, at MCB, we ensure that our funding strategies are carried out coherently while we continue to tap capital markets. Incorporating sustainability into funding initiatives has several key benefits: access to a larger investor pool and competitively-priced funding lines, which in turn enables the organisation to be more competitive. As such, integrating sustainability into daily banking activity will become increasingly important.

Mrs Vanessa Doger de Spéville, Head of Sustainability, Reputation & Engagement at MCB Ltd, underscored that this facility demonstrates the bank’s willingness to co-create ESG-linked products with stakeholders to drive positive impact. Are there other ESG-linked initiatives in the pipeline or already in progress?

One of the key focuses this year is upgrading our sustainability framework in line with international standards, including obtaining a Second Party Opinion on the framework. We view this as a gateway to pursue our sustainability journey. On one hand, it will act as a catalyst for the Bank to ‘originate’ sustainable assets, while on the other hand, it will enable us to raise liabilities competitively through use of proceeds or sustainability-linked instruments.

We understand that the Bank aims to make a significant impact through its financing operations in Mauritius and beyond, fostering sustainability, addressing climate change, and promoting gender equality. Could you give us an overview of the bank’s upcoming roadmap for 2024?

We have already spelt out our intentions through our raison d’être, Success Beyond Numbers, which gives us the momentum to create more impact along our sustainability journey by being a responsible Bank, an inspiring institution for the community, and a sustainable solutions provider for Mauritius and beyond. As a responsible bank with sustainability as a strategic topic, we are committed to nurturing, supporting, and encouraging a vibrant and sustainable local economy, investing in preserving the country’s environmental and cultural heritages, and promoting its people’s individual and collective well-being.

It was important for us to translate our journey on the international market.