Will sustainability-linked loans drive a revolution in finance?
In February, Anheuser-Busch InBev (AB InBev) announced a $10.1 billion sustainability-linked revolving credit facility. The announcement send shockwaves through the market; it was the largest sustainability-linked loan (SLL) among publicly listed companies in the alcohol sector. By using a pricing mechanism that incentivizes improvement in areas aligned with the company’s 2025 sustainability goals, the loan connects the dots between financial and non-financial risks by replacing the company’s credit line, a longstanding vanguard of business worthiness, with one heavily dependent on sustainability metrics.
For most companies, linking sustainability performance to financial credit risk has remained a theoretical aspiration. As AB InBev’s CFO Fernando Tennenbaum put it, “We don’t need a business case for addressing these issues. If our communities and environment are not healthy, we have no business. So, for us, it’s very easy to champion this work.”
Tennenbaum spoke Wednesday at GreenFin 21, along with Enel Group CFO Alberto De Paoli and PIMCO’s U.S. Chief Investment Officer Scott Mather. (The video of the entire plenary session may be viewed on the GreenBiz.com home page.)
JOIN OUR FREE NEWSLETTER
Remain an expert and save time ? Take few seconds to complete the registration form. Click here !