Burberry has strengthened its resolve to be climate positive by 2040 by refinancing a credit facility to a £300m Sustainability Linked Loan.
The Revolving Credit Facility (RCF) was refinanced by Lloyds Bank to support the luxury fashion brand into accelerating emissions reductions by 46 per cent across its extended supply chain (Scope 3) by 2030. Burberry plans to become net zero by 2040 and will invest in nature-based projects with carbon benefits to restore and protect natural ecosystems and boost the livelihoods of global communities.
The firm committed to the climate positive target last June, which will place the company ten years ahead of the 1.5C pathway laid out in the Paris Agreement.
The loan forms an extension of Burberry’s efforts to embed ESG (Environmental, Social and Governance) across its operations, including its sources of financing. It has already commenced efforts towards advancing the decarbonisation agenda, including reducing its market-based emissions by 92 per cent since 2016.
Last September, Burberry became the first luxury brand to use a sustainability bond, which engaged investors to finance sustainability products such as refurbishing properties certified by LEED (Leadership in Energy and Environmental Design) or BREEAM (Building Research Establishment Environmental Assessment Method). The projects across its portfolio ensure there is no pollution from packaging and natural resources are sustainably sourced.
Last year Lloyds Bank created a new Sustainability and ESG Finance team to provide funding and strategic insights to help support corporate clients with their sustainability requirements.
Scott Barton, Managing Director of Lloyd’s Corporate & Institutional Coverage team, said: “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 the lead coordinator on this funding package for Burberry and look forward to helping support Burberry on its sustainability journey.”
This year, Burberry will be carbon neutral across its own operational use globally and use 100 per cent renewable electricity.
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.”
Liam Goldsworthy, Principal Consultant – Sustainable Business – Fashion, Luxury and Home, at Acre said:“It’s fantastic to see the increased sophistication in the relationship between lenders and their corporate customers beyond mainstream ESG engagement in the form of unrestricted sustainability linked loans, and the uptake of such agreements within the luxury fashion industry in recent years. With Chanel also announcing a similar credit facility in 2020, worth €600 million, it’s clear this will become an important vehicle for supporting the green transformation of the industry for years to come.”
To learn about any upcoming opportunities, please contact Liam via liam.goldsworthy@acre.com
Liam leads permanent and contract & interim sustainability search with UK & APAC consumer & personal goods organisations, spanning food and beverage, luxury and apparel sectors. This includes placements with FTSE 100 organisations, large privately-owned businesses, SMEs, and the service providers and non-profits that engage across the sector.
Liam also manages Acre’s charitable arm; the Acre Foundation, which supports charities and initiatives that deliver a positive social or environmental impact aligned to Acre’s values.
