RSK Group signs for £1bn sustainability-linked loan
The UK's largest provider of environmental, engineering and technical services, RSK Group, has signed for a £1bn loan with interest rates tied to its progress against key sustainability targets.
Ares Management Corporation, a major US-based alternative investment manager, is overseeing the lending, which consists entirely of debt facilities.
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.
Targets relating to ethics, health and safety include ensuring that all staff receive health and safety training by the end of 2021; ensuring that all offices have a wellbeing champion in place by the end of 2021; training all team leaders on human rights topics by the end of 2021 and completing a full supply chain audit by the end of 2024.
The maximum potential savings for RSK will be some £500,000 in interest. Should it meet targets and achieve any savings, the company has pledged to donate a minimum of 50% to either charitable causes or external sustainability-related projects. edie has reached out to Ares Management Corporation for information on the duration of the loan and the potential for any extensions.
“This financing demonstrates our deep commitment to driving sustainable business practices not just within our clients’ businesses, but also within our own,” RSK Group’s chief executive Alan Ryder said. “There are very few firms like Ares that possess the scale, flexibility and sharp focus on ESG to provide a sustainability linked financing of this kind.”
Ares Management Corporation’s co-lead for the European direct lending strategy, Michael Dennis, added: “We are confident that the positive tailwinds for ESG across the spectrum of businesses and sectors will continue to drive demand for RSK’s service offering and we are proud to support the company on this journey.”
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.