TSL Express Daily News

LONDON — Burberry’s finances are going a deeper shade of green with a new sustainability-linked loan coordinated by Lloyds Bank.

The 300 million pounds loan is linked to Burberry’s ambition to be climate positive by 2040, and comes less than 18 months after the company issued a sustainability bond.

Vurberry described the new loan as a revolving credit facility linked to the achievement of ESG targets, such as accelerating emissions reductions across its extended supply chain (Scope 3) 46 percent by 2030 and becoming net zero by 2040, 10 years ahead of the 1.5-degree Centigrade pathway set out in the Paris Agreement.

The company said the loan will also build on its efforts to embed ESG across its operations, including its sources of financing.

In taking out the loan, Burberry joins a legion of European luxury goods companies and fashion brands, including Prada, Moncler, Salvatore Ferragamo and Save the Duck, that are doing the same.

Fashion and luxury brands are under pressure to catch up with other industries, such as energy and automotive, food and beverage to make their mark in the sustainability space.

The banks here are only too happy to help, with institutions including Italy’s Intesa Sanpaolo and France’s Crédit Agricole working with luxury brands to put together deals aimed at assisting businesses hit their green targets, save money and future-proof.

Diana Verde Nieto, cofounder and chief executive officer of Positive Luxury, which certifies sustainable businesses, told WWD in an interview last year that companies with the most ambitious ESG goals are now the ones that are most valuable to investors. The risk of not working quickly enough toward serious climate change goals “is that you become a stranded asset,” Verde Nieto said.

In 2020, Burberry became the first luxury brand to issue a sustainability bond, enlisting the support of investors to finance sustainability projects including refurbishing properties across its portfolio to conform with stringent certification standards; ensuring that natural resources are sourced sustainably; and that pollution from packaging is prevented.

Julie Brown, chief operating and financial officer at Burberry, said the company’s “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 decarbonize our own operations and extended supply chain.”

Lloyds Bank said it created a new Sustainability and ESG Finance team last year to support corporate clients with their sustainability plans, providing funding and strategic insights.

Scott Barton, managing director of Lloyds Bank’s Corporate and Institutional Coverage team, said helping 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.”

The Burberry bond is benchmark-sized, medium-dated and denominated in British pounds. It was offered to professional investors and eligible counterparties. It is traded on the main market of the London Stock Exchange.

The money raised from the bond has gone toward a number of sustainability initiatives at both a corporate and a brand level.

Burberry said it is protecting and restoring natural habitats in countries where it operates; supporting farming communities and seeking farm-level certifications and training in places where it sources raw materials, and helping to develop regenerative and holistic land management practices to grazing and farming systems, among other initiatives.