Thames Water, which broke
new ground in December with its £1.4 billion revolving credit facility (RCF),
became the UK’s first ever corporate to link its interest payments to its GRESB
(Global Real Estate Sustainability Benchmark) infrastructure score. Running
until 2023 with the option of a two-year extension, the RCF is structured so
that outperformance against the infrastructure score will mean a lowered
margin, with the financial gains paid into the British utility company’s
charitable fund.
GRESB data acts as the ESG benchmark for real assets, and in 2018 were
composed of 904 real-estate funds, 75 infrastructure funds, 280 infrastructure
assets and 25 debt portfolios. The data are used by both institutional and
retail investors.
As interest in ESG-driven
(environmental, social and governance) investment grows, the Thames Water
transaction serves as a blueprint for integrating sustainability performance
and financing requirements. The EMEA market for positive incentive loans has expanded
significantly since 2017, which BNP Paribas believes may have topped €40 billion
in 2018.
The BNP Paribas teams
behind the transaction – comprising Global Banking, Sustainable Finance and
Loans – were named Team of the Month
in The Banker magazine’s February 2019
edition. Two of the largest positive incentive loans to date were also arranged
by BNP Paribas: Danone’s €2 billion transaction linked to its ESG score and
Solvay’s €2bn deal linked to a greenhouse gas emissions reduction target.
