Burberry sets up first sustainability-linked loan with Lloyds Bank – WWD

LONDON – Burberry’s finances are taking on a greener hue with a new sustainability-linked loan coordinated by Lloyds Bank.

The £300million loan is linked to Burberry’s ambition to be climate positive by 2040, and comes less than 18 months after the company issued a sustainability bond.

Burberry described the new loan as a revolving credit facility tied to achieving ESG goals, such as accelerating emissions reductions across its extended supply chain (Scope 3) 46% here 2030

and become net zero by 2040, 10 years ahead of the 1.5 degree Centigrade trajectory defined in the Paris Agreement.

The company said the loan would also build on its efforts to integrate ESG into its operations, including its funding sources.

In taking out the loan, Burberry joins a legion of European luxury goods companies and fashion brands, including Prada, Moncler, Salvatore Ferragamo and Save the Duck, who are doing the same.

Fashion and luxury brands are under pressure to catch up with other industries, such as energy and automotive, food and beverage, to make their mark on sustainability.

Banks here are only too happy to help, with institutions such as Italy’s Intesa Sanpaolo and France’s Crédit Agricole working with luxury brands to put in place deals to help companies achieve their green goals, save money and prepare for the future.

Diana Verde Nieto, co-founder and chief executive of Positive Luxury, which certifies sustainable businesses, told WWD in an interview last year that companies with the most ambitious ESG goals are now the ones with the most value to consumers. investors. The risk of not working toward serious climate change goals fast enough “is that you become a locked asset,” Verde Nieto said.

In 2020, Burberry became the first luxury brand to issue a sustainability bond, seeking support from investors to fund sustainability projects, including renovating properties in its portfolio to meet certification standards. strict; ensuring that natural resources come from sustainable sources; and that pollution by packaging is avoided.

Julie Brown, Chief Operating and Finance Officer at Burberry, said, “The company’s long-term success depends on creating a net-zero future. Linking funding sources to sustainable initiatives will help drive this, not just in the luxury industry, but across the economy as well. We are grateful for the support of our partner banks in establishing this financing, which will help us on our journey to decarbonize our own operations and our extended supply chain.

Lloyds Bank said it set up a new ESG sustainability and finance team last year to support corporate clients with their sustainability plans, providing finance and strategic insights.

Scott Barton, managing director of the Corporate and Institutional Coverage team at Lloyds Bank, said helping clients achieve net zero “is a key priority for us. Working alongside a climate leader such as Burberry as it goes green will be crucial in helping the wider luxury fashion industry achieve its ambitious goals.

The Burberry bond is of benchmark size, medium maturity and denominated in pounds sterling. It has been offered to professional investors and eligible counterparties. It is traded on the main market of the London Stock Exchange.

Money raised through the bond has been used for a number of corporate and brand-level sustainability initiatives.

Burberry said it protects and restores natural habitats in the countries where it operates; support farming communities and seek farm-level certifications and training in places where it sources raw materials, and help develop regenerative and holistic land management practices for grazing and farming systems agriculture, among other initiatives.

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