RAM-rated Edra Solar Sdn Bhd’s (Edra Solar) proposed RM245 million ASEAN Sustainability SRI Sukuk (Proposed Sustainability Sukuk) has joined the ranks of trailblazers. The RAM-rated proposed issue is a Malaysian pioneer in blending green and social elements, thus creating a sustainability sukuk.
Edra Solar’s Proposed Sustainability Sukuk is the country’s first to be aligned with the requirements of Securities Commission Malaysia’s Sustainable and Responsible Investment (SRI) Sukuk Framework, the ASEAN Green Bond Standards, the ASEAN Social Bond Standards as well as the globally recognised Green Bond Principles, Social Bond Principles and Sustainability Bond Guidelines.
On 6 September 2019, RAM Ratings assigned a preliminary AA2/Stable credit rating to the Proposed Sustainability Sukuk. Concurrently, RAM Consultancy Services Sdn Bhd (RAMC) – a provider of sustainability services and environmental, social and governance (ESG) analytics – assigned Tier-1 Environmental Benefit (Tier-1 EB) and Tier-3 Social Benefit (Tier-3 SB) ratings to the proposed issue. The Proposed Sustainability Sukuk, therefore, has the distinction of carrying a combination of three different types of ratings from RAM – a credit rating, an environmental benefit rating and a social benefit rating– another market first.
“Edra Solar’s Proposed Sustainability Sukuk is the first transaction to be assigned a RAMC Social Benefit rating – pioneered by RAMC – and contributes to further innovation in sustainable finance,” highlights Promod Dass, RAMC’s CEO. “RAMC’s social bond/sukuk assessment represents a quantitative and qualitative evaluation of a project’s contribution to potential social solutions,” adds Dass. RAMC has considered the strategic importance of the project as well as its direct and measurable social benefits. The project’s scale, depth and duration are also key elements in RAMC’s criteria.
A buffer zone around the solar plant, allocated by Edra Solar for the cultivation of pineapples and other crops (from the otherwise vacant land), is expected to generate income for local farmers and employment opportunities for the local community. Up to 40 acres out of the entire 260-acre project site have been earmarked for this socio-agricultural project. As the cultivation project will be a long-term but relatively small social scheme at district level, RAMC has assigned the project a Tier-3 SB.
RAM Group is an active contributor to sustainability and green finance development globally. On 26 May 2016, RAM Ratings joined the global line-up of six pioneer credit rating agency signatories to United Nations (UN)-supported Principles for Responsible Investment’s Statement on ESG in Credit Ratings.
In 2019, RAM Ratings rated the world’s first mini-hydro green sukuk by Telekosang Hydro One Sdn Bhd, which also received a second opinion from RAMC. In 2018, the world’s first UN Sustainable Development Goals sukuk issued by HSBC Amanah Malaysia Berhad under the Bank’s RM3 billion Multi-Currency Sukuk Programme (2012/2032) was also rated by RAM Ratings. In 2017, RAM Ratings rated the world’s first green sukuk issued by a solar power player, Tadau Energy Sdn Bhd. In 2015, RAM Ratings rated the world’s first SRI sukuk – Sukuk Ihsan – pioneered by Khazanah Nasional Berhad, the Malaysian government’s strategic investment fund.