Two years after the first ESG-linked syndicated loan, the appetite for sustainable lending is growing fast. With many bankers going as far as predicting that green loans will be the new market standard, it is clear to see why there are so many banks and corporates jumping on the bandwagon.
The last two years have been big for sustainable lending. Beginning in early 2017, when the health technology company Philips closed a €1bn environmental, social and governance (ESG) linked loan, the market for these types of transactions has taken off in a real way.
Right at the end of 2018, the airport operator AENA placed an €800mn ESG-linked revolving credit facility; the electricity provider Verbund placed a €500mn ESG-linked syndicated loan; and the consumer goods company Henkel concluded a €1.5bn green credit facility. The latter two transactions marked the first ever use of ESG ratings in loan agreements by Austrian and German borrowers.
“When re-organising our syndicated credit lines, we deliberately opted for the concept of the ‘green loan’. We are convinced that sustainability is becoming increasingly important for the financial markets and investors,” said Carsten Knobel, Henkel’s CFO, at the time the deal was completed.
This article appears in the April-May 2019 edition of EMEA Finance (subscriber only)