Decarbonising the global
economy requires collaboration between multiple sectors and stakeholders,
including significant support from finance. The rise of the
sustainability-linked loan (SLL) evidences an increasing shift in corporate
strategy to embed sustainability into financing, with the market growing 96% between
2018 and 2019 to over €100 billion.
ESB provided a significant boost to the Irish SLL market in February 2020,
announcing an inaugural €1.4 billion SLL – the first for an Irish utility. The
five-year loan is directly linked to ESB’s 2030 Brighter Future strategy, in which it commits
to reduce the carbon intensity of its generation output by 40%, and to increase
renewable generation output by 170% relative to the 2018 baseline.
Under the key performance
indicator (KPI) mechanism, ESB will benefit from an interest reduction if it
meets the targets, or will pay a higher interest rate if the KPI targets are
missed. This SLL is ESB’s second foray into the sustainable finance markets,
following on from a debut green bond launched in June 2019, Ireland’s first
corporate public green bond.
ESB provided a significant boost to the Irish SLL market in February 2020, announcing an inaugural €1.4bn SLL – the first for an Irish utility.
Billy Quinlan, Head of
Global Banking Ireland at BNP Paribas, said: “We are proud to be working
with ESB as they transition towards a low-carbon energy future based on clean,
reliable, affordable electricity. This SLL is a great example of how
sustainable finance can be effectively deployed to support our clients’ efforts
to contribute towards climate action, in line with the United Nations
Sustainable Development Goals and Principles for Responsible Banking.”
Pat Fenlon, Executive
Director, Group Finance and Commercial at ESB, said: “The use of green finance,
including this sustainability-linked loan and our recent green bond, further
demonstrates ESB’s commitment to leading the transition to a low-carbon future
while addressing the requirements of today’s financial markets, which are
directing increasing levels of capital into carbon action investments. By
having sustainability at the heart of our operations, we can maintain a viable
and successful business with the financial strength to invest in this future
for all our customers.”