Location:
United Kingdom
Investor:
Santander
Investment:
Sustainability-linked loan tied to companies improving their sustainability targets such as carbon emission reduction goals.
Investment Size:
Dependent on the business, their targets and aims.
Impact:
Helps companies to grow whilst becoming more sustainable.
In 2021 Tesco established a partnership with the World Wide Fund for Nature (WWF) to assist some of their suppliers in establishing their sustainability objectives and accessing Sustainability-Linked loans. Tesco’s suppliers that are taking part in this initiative will be eligible for advantageous financial rates that are well below the market rate, offered by the bank, Santander.
These financial rates will be tied to the supplier’s disclosure of carbon data, targets for emissions reduction, and the progress made toward achieving these objectives.
The suppliers will provide this information, but it will also be independently and externally verified and by ESG experts. The progress of the company’s metrics will either maintain, reduce or improve the interest rate. With the aim being that companies will be more motivated and empowered to improve their sustainability metrics, as they are held accountable for them and rewarded for improvements in the form of a better interest rate.
The financial incentives are specifically targeted at small and medium-sized enterprises (SMEs), enabling them to leverage improved financing rates from Santander to bolster their environmental initiatives. Additionally, Tesco has committed to providing a range of online tools to aid suppliers, particularly SMEs, in registering and actively participating in the program.
Read more, here.
