Hempel links $1.62bn credit facilities to sustainability targets

World-leading coatings company, Hempel has successfully amended its EUR1.5 billion ($1.62 billion) credit facilities, linking borrowing costs to four sustainability targets. 

Coinciding with Earth Day (April 22) and in line with its ‘Investing in our planet’ theme, Hempel has amended its EUR1 billion Revolving Credit Facility and its EUR500 million Term Loan linking borrowing costs to its sustainability targets. 

To help drive efforts to meet Hempel’s ambitious sustainability targets, the facility’s interest margin will be adjusted up or down, based on Hempel’s ability to meet its four sustainability goals. 

KPIs linked to loans

Hempel’s Key Performance Indicators (KPIs) linked to its loan agreements are reduce scope 1 and 2 CO2e emissions, reduce scope 3 CO2e emissions, reduce waste to landfill at production sites and reduce and phase out hazardous (red) raw materials (RRM). 

Hempel will effect 90% reduction in absolute CO2e emissions for Scope 1 & 2 by 2025 in line with the Science Based Targets 1.5°-degree pathway. It will screen 70% of direct and indirect spend suppliers by 2025 through the Hempel Procurement Sustainability Screening. 

Moreover, the company will ensure that zero waste goes to landfill from production sites by end of 2025 and bring about 25% reduction of RRM (kg/1,000L paint produced) by end of 2025. 

Reduction targets

“Linking our credit facilities to our ESG KPIs is a further commitment to reaching our CO2 emissions reduction targets. We are proud to have received the support of our banks to rewrite the terms of this facility, incentivising us to achieve our sustainability ambitions,” says Lars Joenstrup Dollerup, Executive Vice President and Chief Finance Officer at Hempel. 

“Further to the approval of our science-based targets, we are taking the next step to keep us committed to achieving our sustainability goals. We are integrating sustainability into everything we do at Hempel and tackling our carbon footprint both within our own operations and across the entire value chain,” says Katarina Lindstroem, Executive Vice President and Chief Operating Officer at Hempel. “It’s the natural next step for us to also include sustainability considerations in our financing.” 

The following banks have agreed to refinance Hempel’s loans according to the new terms: Nordea, Danske Bank, SEB, HSBC, Unicredit, BNP Paribas, Jyske Bank, BBVA and Commerzbank. Nordea has acted as sole Sustainability Coordinator for the facilities. 

“Hempel is taking a leading role in its industry when it comes to sustainability linked financing. The sustainability KPIs that are linked to the loan agreements demonstrate a strong commitment and dedication to sustainability and sets Hempel on a very ambitious trajectory,” says Jacob Michaelsen, Head of Sustainable Finance Advisory at Nordea.

Source: TradeArabia News Service