Luxury brand Burberry announced that it has signed a £300 million sustainability linked loan, with terms tied to the company’s performance towards achieving its zero and supply chain decarbonization ESG goals. The loan, which serve to refinance Burberry’s revolving credit facility, was coordinated by Lloyd’s Bank.
The agreement marks an expansion in Burberry’s use of sustainable finance instruments, following the company’s issuance of its inaugural £300 million sustainability bond in September 2020, the first of its kind in the luxury fashion sector. While the prior bond was issued with proceeds to be directed to sustainability-related projects, the new loan ties its terms to the company’s sustainability performance, a sustainable finance trend that has grown rapidly over the past year.
Specifically, the loan is tied to the achievement of ESG targets under its “Climate Positive” ambition. In June 2021, Burberry announced a new environmental sustainability goal, committing to becoming Climate Positive by 2040, going beyond the company’s 2040 net zero goal and aiming to have a positive climate impact beyond the footprint of its value chain, with an interim goal to reduce scope 3 supply chain emissions 46% by 2030.
Julie Brown, Chief Operating and Financial Officer at Burberry, said:
“At Burberry we believe our long-term success depends on creating a net zero future. Linking sources of funding to sustainable initiatives will help drive this, not only in the luxury industry but also across the wider economy. We’re grateful for the support of our relationship banks in establishing this funding, which will help us on our journey to decarbonise our own operations and extended supply chain.”
Scott Barton, Managing Director of Lloyds Bank’s Corporate & Institutional Coverage team, added:
“Helping our clients reach net zero is a key priority for us. Working alongside a climate leader such as Burberry as it progresses its green journey will be crucial for helping the wider luxury fashion industry meet its ambitious goals. We’re proud to have acted as lead coordinator on this funding package for Burberry and look forward to helping support Burberry on its sustainability journey.”