Larsen & Toubro (L&T), an Indian multinational conglomerate, has concluded the transition of a $150 million loan with Bank of America. The loan has been converted into a sustainability-linked loan (SLL), which means that the interest rate on the loan will be linked to L&T’s performance on two sustainability targets: greenhouse gas (GHG) emission intensity and water consumption intensity.
The transition of the loan to an SLL is a significant step for L&T in its commitment to sustainability. The company has set ambitious targets to reduce its GHG emissions and water consumption by 30% and 20%, respectively, by 2030. The SLL will help L&T to track its progress on these targets and ensure that it is on track to meet its sustainability goals.
The SLL was arranged by Bank of America and Credit Suisse. The loan has a tenor of five years and is linked to two sustainability performance indicators (SPIs):
- GHG emission intensity: The interest rate on the loan will be reduced by 0.1% for every 1% reduction in L&T’s GHG emission intensity below a baseline level.
- Water consumption intensity: The interest rate on the loan will be reduced by 0.05% for every 1% reduction in L&T’s water consumption intensity below a baseline level.
The SLL is a positive development for L&T and for the broader sustainability movement. It is a clear signal that L&T is committed to sustainability and that it is willing to put its money where its mouth is. The SLL will help L&T to reduce its environmental impact and to become a more sustainable company.
Here are some of the key benefits of the SLL for L&T:
- The SLL will help L&T to reduce its environmental impact.
- The SLL will help L&T to improve its reputation as a sustainable company.
- The SLL may make it easier for L&T to access future financing.
Here are some of the challenges that L&T may face as a result of the SLL:
- L&T will need to track its progress on the two SPIs and ensure that it is meeting its targets.
- L&T may face challenges in reducing its environmental impact.
- The SLL may increase the cost of financing for L&T.
Overall, the SLL is a positive development for L&T. The SLL will help L&T to reduce its environmental impact and to become a more sustainable company. The SLL may also make it easier for L&T to access future financing.