John Lewis links £420m loan to net-zero target
The John Lewis Partnership has signed a five-year revolving credit facility worth £420m that will be linked to environmental targets such as the retailer's effort to reach net-zero emissions by 2035.
The £420m revolving credit facility has been provided by a total of seven banks. It replaces an existing £500m worth of facilities, all of which were due to expire at the end of 2022.
Under the new facility, the interest rates paid by the Partnership will vary depending on progress against three sustainability pillars over the next five years. The rates are in relation to a target to reach net-zero by 2035, deliver a 50% reduction in food waste across the Waitrose brand by 2030 and ending the use of fossil fuel in transport fleets by 2030.
Under the terms of the new agreement, the interest rate we pay on the facility will vary depending on whether we achieve three environmental targets over five years related to reducing carbon emissions, reducing food waste and moving away from fossil fuels.
Additionally, the company has signed up to the Science Based Targets initiative’s (SBTi) Business Ambition for 1.5C. John Lewis claims it is in the process of establishing science-based targets for itself and Waitrose, both of which will be aligned to the 1.5C pathway of the Paris Agreement.
John Lewis’s executive director of finance Bérangère Michel said: “This is an important agreement for the Partnership. It is critical for businesses to align financial strategy with sustainability goals in order to address climate change. I am pleased that the Partnership is living up to its sustainability commitments and its purpose by making this very important step, ahead of the COP26 summit.
“This credit facility also reinforces the strong relationships we have with our banking partners, who continue to support the Partnership and our plans for the years ahead.”
Signing on the line
John Lewis joins the likes of engineering and technical services, RSK Group, in securing finance based on sustainability performance.
In August, RSK Group signed for a £1bn loan with interest rates tied to its progress against key sustainability targets. Under the terms of the loan, RSK will benefit from lower margins if it delivers its sustainability targets relating to carbon emissions, ethics and health and safety.
On emissions, RSK Group pledged in March to set 1.5C-aligned science-based climate targets. It has until March 2023 to have such targets approved by the Science-Based Targets Initiative (SBTi) but is striving to have them approved by the end of 2022.
Many businesses have announced the completion of sustainability-linked loan deals during 2021 so far.
Back in January, Asian real estate giant City Developments Limited (CDL) confirmed a new green revolving credit facility totalling $470m that will be used to refinance its ‘the Republic Plaza’ commercial property and future low-carbon projects.
February saw the world’s largest seafood firm, Thai Union, announcing a new $400m loan package with interest payments linked to climate, sustainability and due diligence targets. Within a week, brewer AB InBev had announced what it claims is the world’s largest corporate sustainability-linked loan to date, priced at $10.1bn.
Other companies to have subsequently announced sustainability-linked loan deals include building materials and design giant Kingspan and home improvement and garden retailer Kingfisher. Additionally, supermarket Tesco, which signed for its own £2.5bn revolving credit facility back in 2020, recently began supporting its major suppliers to follow suit.
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