London – Burberry’s finances are going deeper into the green with a new sustainability-linked loan coordinated by Lloyd’s Bank.
The 300 million pound loan is tied to Burberry’s ambition to be climate positive by 2040, and comes less than 18 months after the company issued the sustainability bond.
Burberry described the new loan as a revolving credit facility linked to achieving ESG targets, such as accelerating emissions reductions across the expanded supply chain (Scope 3) by 46 percent by 2030.
It will become net zero by 2040, 10 years earlier than the 1.5°C path set in the Paris Agreement.
The company said the loan will also build on its efforts to include environmental, social and corporate governance in its operations, including its funding sources.
Upon obtaining the loan, Burberry joins a slew of European luxury goods companies and fashion brands, including Prada, Moncler, Salvatore Ferragamo and Save the Duck, who are doing the same.
Fashion and luxury brands are under pressure to catch up with other industries, such as energy, automobiles, and food and beverages, to make their mark in sustainability.
Banks here are very happy to help, with institutions like Italy’s Intesa Sanpaolo and France’s Crédit Agricole working with luxury brands to strike deals aimed at helping companies achieve their green goals, save money and future-proof.
Diana Verdi Nieto, co-founder and CEO of Positive Luxury, which certifies sustainable business, told WWD in an interview last year that companies with the most ambitious ESG goals are now the most valuable to investors. The risk of not acting fast enough to achieve serious climate change goals, Ferdi Nieto said, “is becoming a stranded asset”.
In 2020, Burberry became the first luxury brand to issue sustainability bonds, mobilizing investor support to fund sustainability projects including property renovations across its portfolio to comply with stringent certification standards; Ensuring sustainable access to natural resources; and that contamination of packaging is prevented.
“The company’s long-term success depends on creating a zero-zero future. Connecting sources of funding to sustainable initiatives will help drive this, not only in the luxury industry, but across the broader economy,” said Julie Brown, Burberry’s chief financial officer and chief operating officer. We are grateful for the support of our client banks in creating this financing, which will assist us in our journey to decarbonize our operations and extended supply chain.”
Lloyds Bank said it created a new sustainability, ESG team last year to support corporate clients with their sustainability plans, providing funding and strategic insights.
Helping clients reach net zero “is a key priority for us,” said Scott Barton, managing director of Lloyds Bank’s corporate and institutional coverage team. Working alongside a climate leader like Burberry as it advances on its green journey will be critical to helping the industry The broader luxury fashion is achieving its ambitious goals.
Burberry bonds are standard size, medium term, and denominated in British Pounds. Offered to professional investors and qualified counterparties. They are traded on the main market of the London Stock Exchange.
The money raised from the bond went toward a number of corporate and brand-wide sustainability initiatives.
Burberry said it protects and restores natural habitats in the countries in which it operates; Support farming communities and pursue farm-level certification and training in places where raw materials are exported, and help develop renewable, comprehensive land management practices for grazing and farming systems, among other initiatives.