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ESG-linked facilities: connecting sustainability and performance

13 January 2022
Green fingerprint

Sustainability & People Report 2021

ICG Sustainability and People Report front cover
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ICG has committed c.$3bn of ESG-linked financing

By linking the performance of our business and our strategies with efforts to improve sustainability and address the climate challenge, we are showing a commitment to effect real change.

We are doing this across a number of facilities and funds, and have worked with 17 banks to achieve the following:

ICG plc – Revolving Credit Facility (RCF)

We have a revolving credit facility which is linked to carbon emissions. It underscores ICG’s commitment to sustainability, as we align our corporate financing structure with our environmental, social and governance (ESG) priorities.

We have a goal to reduce our scope 1 and 2 carbon emissions across our operations by 80% by 2030. If we hit this metric, we get a benefit on the margin and commitment fee. If we miss the targets, we have an increase on the margin and commitment fee.

Europe VIII

The Fund, which is dedicated to investing in mid to upper middle market European businesses, has an enhanced ESG framework. In addition, the Fund has an ESG-linked line of credit facility which has margin adjustments based on two KPIs linked to portfolio coverage:

  1. Set a portfolio company target to reduce emissions by 2030, in line with a science-based target (SBT): meet emission reduction target annually
  2. Implementation of the Fund’s ESG engagement strategy

Real Estate Debt VI

The Fund has integrated a Green Loan Framework (GLF) into its investment strategy to incentivise and support borrowers to make environmentally sustainable improvements to their developments, including major refurbishments and operational investments.

The Fund has incorporated an ESG-linked bridge facility with the margin linked to two KPIs including:

  1. 50% of the Fund’s assets under management make use of the GLF
  2. More than 50% of the underlying assets have achieved a Green Building Certificate to at least a ‘very good’ level, including BREEAM and LEED

ICG has raised to date c.$3bn1 to ESG-linked financing. ESG is fundamental to ICG and it was definitely the right time for us to link sustainability into the facility. Stakeholders will come to expect ESG-linked pricing metrics as the norm, rather than the exception.

Steve Burton, Treasurer, ICG

1. As at 30 September 2021

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