Spurred on by calculations showing that companies with low environmental impact pose less financial risk, banks are starting to offer cheaper fastest way loans if chemical companies meet agreed levels of environmental performance. In this way, companies and banks can achieve a mutually beneficial relationship through green finance, according to an article by Chemistry and Engineering News (C&EN), the weekly news magazine of the American Chemical Society.
Companies such as Stora Enso, Indorama Ventures, DSM and Solvay have become among the first to take out sustainability-related loans, writes Alex Scott, editor-in-chief. Kemira, a specialty chemicals company, has agreed to meet three criteria to obtain a sustainability loan: reduce greenhouse gas emissions by 20% by 2020, ensure that at least half of its revenue comes from products that improve the efficiency of the use of resources by customers and maintain its gold-standard sustainability rating from the environmental assessment firm EcoVadis. This sustainability rating determined the initial loan interest rate, which will increase if the business fails to meet environmental goals.
Eco-loans have mostly been adopted by a handful of European companies, but the approach could easily be used in Asia, especially China and Southeast Asia, where supply chain sustainability is essential. In general, the financial sector is increasingly interested in environmental, social, government and sustainability issues, which may eventually lead some banks to deny loans to companies with poor environmental records. This is just the start of chemical companies linking loans with environmental sustainability, experts say.
The article, “Chemical makers sign up for sustainability loans,” is available free of charge. here.
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