First it was green bonds and now we are seeing the emergence green credit.
In February, the French food products company, Danone, announced it had introduced environmental, social and governance (ESG) criteria to its syndicated €2 billion credit facility led by BNP Paribas.
The credit facility now includes a credit line adjustment mechanism based on the ESG criteria provided by third-party providers, Sustainalytics and Vigeo Eiris. It means that if the firm is outperforming on two of its major sustainable goals, its coupon will be discounted and if it underperforms, it will pay a premium.
The payable margin adjustment, reviewed at least once a year, is based on scores granted to Danone by the two research and data companies, and on the percentage of consolidated sales of Danone covered by B Corp certifications.
Commenting on the facility, Cécile Cabanis, chief financial officer at Danone, says the move is: “Consistent with Danone’s ambition to become a B Corp and with [its] long-term commitment to create sustainable value for our shareholders and all our stakeholders.” B Corporations are for-profit companies granted a certification for demonstrating high standards of social and environmental performance.
