Renewi’s innovative Green Loan deal amends and extends its main €550m (£482m) banking facility until May 2025. It involves the certification of its assets as green by an independent expert so that the related borrowings to purchase these assets can also be green certified.
Unusually, the company was able to do this for all its main borrowing facility – most of its assets are classified as ‘green’ because they support ‘pollution prevention and control’ as defined in the ICMA Green Bond Principles and the LMA Green Loan Principles.
The deal has been financed by Renewi’s six relationship banks: ABN AMRO, BNP Paribas Fortis, HSBC, ING, KBC and Rabobank. This strong endorsement from the banks demonstrates their continued support of the company, as well as their broader support for the circular economy by rewarding businesses that contribute positively to the environment.
Sustainability is at the heart of the company: it is focused on recycling waste into secondary raw materials rather than on its disposal through landfill or incineration. The move to a green loan was a logical step not only to reflect this sustainable approach in operations but to apply it to financing activities. The facility promotes green credentials and secures long-term funding.
The business is pioneering the way with its new banking facility, being one of the first FTSE 250 companies to introduce sustainability targets directly to the terms of a loan. Renewi will now be committing to ambitious objectives.
It will be rewarded financially by the banks for achieving in each of five specific objectives and, by delivering improved sustainability, it can reduce the costs of funding. These targets include measures for: increases in recycling and recovery; growth in carbon avoidance; reducing fleet emissions; transition to a low polluting Euro VI fleet; and ongoing reduction in three-day accident rate.
Specific measures for each of the targets are expected to be announced this summer in Renewi’s annual corporate social responsibility (CSR) report. The business has already made great progress with sustainability. In the past year, it recycled or recovered some 90% of the waste it managed and, through operations that produce secondary raw materials, it avoided around three million tonnes of carbon.
The Green Loan deal is positive for the business because it shows employees, shareholders and customers that it takes sustainability seriously. It is committing to a number of stretching targets that will focus operations on common CSR goals.
By investing in Renewi, shareholders can be assured that they are investing in a ‘pure play’ company where virtually all its assets and operations are ‘green’. Its staff will know they are working for a company doing the right thing by recycling waste into secondary raw materials. And customers will be able to see that, by working with Renewi, they are working with a business with sustainability at its heart.
Toby Woolrych is Chief Financial Officer at Renewi
Roland Mees, director, ING Sustainable Finance, writes: Together with ABN Amro, ING has introduced an innovative feature in this financing by labelling almost all of Renewi’s assets as ‘green’, according to the Green Bond and Green Loan principles. As second opinion provider, Sustainalytics has assessed that the label ‘green’ is justified for more than 95% of Renewi’s assets.
In the context of plans for sustainable finance by the EU, this means that Renewi’s business can be classified under ‘waste minimisation’, focusing on the reuse of waste and circular economy.
Sustainability is an important strategic priority for ING and ABN, and we are proud to support Renewi to align its financing operations with its core business by formulating a Green Framework, which serves as an umbrella for current syndicated facilities and future debt issuances.
This is an important step for a FTSE 250 company. It enhances transparency of the financial markets through signalling to investors and lenders which parts of a company’s balance sheet contribute to sustainable development. Lenders and investors are increasingly held to account by their clients to invest in companies that are committed to sustainability. Through this transaction with Renewi, the syndicate banks can live up to this responsibility.
We hope that more companies will follow. For ‘pure’ players, implementing the Green Framework forms a cornerstone in the strategic dialogue with stakeholders.