Balfour Beatty has taken a £375m loan which comes with conditions over how well it performs on a range of sustainability measures.
The contractor has converted its £375m revolving credit facility (RCF) to what it claimed is the largest sustainability-linked loan in the UK construction industry to date.
The agreement, which has extended the maturity of the facility to October 2024 at the same time, incentivises the group to deliver performance improvements in three areas: carbon emissions, social value generation, and an independent environmental, social and governance (ESG) rating score, as determined by Sustainalytics, an ESG research, ratings and data provider for institutional investors and companies.
Performance in these three areas will be monitored during the lifetime of the facility and depending on the outcomes achieved, a credit margin reduction or increase will be applicable.
Phil Harrison, Balfour Beatty chief financial officer, said: “Balfour Beatty has long been at the forefront of sustainability in the construction sector, with clear targets and ambitions as set out in the company’s Group Sustainability Strategy. We are delighted to further demonstrate our commitment with this new sustainability linked loan.
“We appreciate the support of our international bank group and the confidence this commitment reflects in Balfour Beatty.”
Max Jones, infrastructure and construction director at Lloyds Bank, said: “We’re proud to have worked with Balfour Beatty’s international bank group to fund and coordinate the largest sustainability-linked loan in the UK construction industry.
“With the sector’s drive to becoming more sustainable, critical to the UK’s net zero ambition, this is an important development for the industry as a whole. Acting as the sole sustainability coordinator and the facility agent signals our commitment to the industry and our support for Balfour Beatty to reach its ESG goals.”
As at 19 October 2021 the RCF, which can be used for general corporate purposes, was undrawn.