French real estate investment trust Gecina has inked a “sustainability performance-linked loan” with ING France for €150 million (AU$239m), with pricing dependant on how it performs on the Global Real Estate Sustainability Benchmark (GRESB).
According to GRESB’s Ruben Langbroek if Gecina’s GRESB score goes up then the margin will come down, and vice versa.
Gecina already has a reputation as a property sustainability leader, being named the world’s fourth most sustainable office REIT by GRESB last year, with a score of 93 out of 100. GRESB measures environmental, social and governance (ESG) aspects including management, disclosure, stakeholder engagement, as well as quantitative performance indicators around energy, water, carbon and waste.
The funds will be available for Gecina to refinance its existing bilateral revolving credit facility. ING France chief executive Karien van Gennip said this was the world’s first example of a sustainable improvement loan being based on a GRESB rating.
“We are delighted to bring an innovative sustainability offer to support and stimulate our clients,” Ms van Gennip said.
“We are convinced that sustainable finance will be a new standard to our industry and will continue to find innovative ways to support and stimulate our clients on their sustainability journey.”
Gecina chief executive Méka Brunel said the sustainable improvement loan demonstrated the company was putting environmental and social concerns on “an equal footing” with economic ones.
GRESB co-founder and managing director Sander Paul van Tongerensaid there were opportunities for other real estate companies to get involved in similar deals.
“We are greatly encouraged that ING France and Gecina took another important step in sustainable finance by offering a financing with margin linked to GRESB ESG performance data,” he said.
“This commitment by both Gecina and ING France provides clear opportunities for real estate companies and funds looking to enhance ESG performance and directly benefits those with strong commitments for improvement.”
ING in the past year has completed a number of finance deals linked to sustainability performance indicators – not only for sustainability leaders, but also providing a carrot to those with poor sustainability performance committed to improvement. For example, it signed with the world’s largest producer of palm oil, Wilmar International, which came following an Amnesty International report accusing the company of human rights abuses throughout its supply chain, including child labour and unsafe working conditions.
In response the company released a policy aimed at protecting children, and signed a sustainability improvement loan with ING, the terms of which will be based on its improvement on ESG metrics, to be independently verified.
Other sustainability-linked loans have been related to health and technology, chocolate and cocoa production, and gas and electricity.