Mondi inks €750m adjustable loan based on SDG performance
Packaging giant Mondi has signed a new €750m revolving multicurrency credit facility agreement (RCF) that will be adjusted based on the company's performance against its sustainability strategy that is aligned to the Sustainable Development Goals (SDGs).
The 5-year RCF has been agreed as part of a refinancing of an existing €750m loan that was set for July 2022. It includes an option to extend the RCF by up to two years based on the approval of the 10 banks that have arranged the structure of the agreement.
Under the terms of the agreement, the margin of the RCF will be adjusted based on Mondi’s performance against specified sustainability targets. The banks that arranged the RCF are: Barclays, BBVA, Bank of America, BNP Paribas, Commerzbank, Deutsche Bank, Erste Group, Raiffeisen Bank International, SEB and UniCredit.
Mondi’s new strategy was released in January this year. It commits the packaging firm to reach zero-waste-to-landfill from manufacturing by 2030 and has a collection of targets linked to the SDGs.
As for climate action, MAP2030 includes science-based emissions targets covering Scope 1 (direct) and Scope 2 (power-related) sources. Mondi is aiming to reduce emissions across both scopes, on a per-tonne-of-production basis, by one-third by 2025, against a 2014 baseline. The reduction will then increase to 72% by 2050.
A time-bound, numerical target for addressing Scope 3 (indirect) emissions has not yet been finalised. Mondi has committed to developing such targets by 2025, in line with climate science and the Paris Agreement.
Mondi’s chief financial officer Mike Powell said: “We are pleased to align our financing to our sustainability framework. Sustainability is at the centre of our purpose, culture and strategy to drive value accretive growth for the benefit of all our stakeholders.
“The Group’s financial position remains strong. The RCF will extend our debt maturity profile and reinforces the strong relationships we have with our banking partners.”
Mondi is the latest corporate to issue a new sustainability-linked loan in recent weeks. Screwfix and B&Q's parent firm Kingfisher has signed for a £550m RCF agreement with interest rates linked to environmental and community targets.
Under the loan agreement, Kingfisher will benefit from lower interest rates if it achieves KPIs aligned with its Responsible Business Plan, covering climate change, forestry and housing. The firm has been targeting a ‘net positive’ impact for people and the planet since 2015 and the updated Responsible Business Plan translates this long-term target into short and mid-term milestones.
In the same week, building materials and design giant Kingspan signed a new €700m revolving credit facility with interest rates linked to environmental targets. Kingspan’s KPIs specifically relate to reducing emissions, promoting the circular economy and water stewardship.
Sustainability-linked loans are becoming increasingly commonplace, along with the boom in corporate green bond issuance. 2021 has also seen major announcements from the likes of AB InBev, Thai Union and Tesco, which is now also supporting suppliers to follow suit.