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Infrastructure giant Larsen & Toubro has successfully closed a three-year Sustainability Linked Loan (SLL) of $107 million from Sumitomo Mitsui Banking Corporation, the Japanese financial services giant, which is also the sole Sustainability Coordinator.
What is a Sustainability Linked loan? Sustainability Linked Loans are loans that incentivize a borrower's achievement of ambitious, predetermined sustainability-linked goals. The terms of these loans are generally tied to the borrower's ESG (Environment, Social, Governance) performance and generally are 25 bps cheaper than normal loans.
The loan fulfilled the core requirements under the Sustainability Linked Loan Principles and DNV Business Assurance Singapore Pte. Ltd. has provided Second Party Opinion on L&T’s SLL. As a Sustainability Coordinator, SMDC will be assisting L&T to achieve its sustainability goals.
The loan includes the facility of interest rate reductions associated with two of the infra giant’s sustainability goals: reduction of the intensity of greenhouse gas emissions & reduction of water consumption intensity against target levels. This loan underlines L&T’s continued commitment to its ESG goals.
“L&T continues to focus on achieving Water Neutrality by 2035 and Carbon Neutrality by 2040. Our long-term strategic plan also clearly outlines the ESG roadmap toward this goal. This SLL transaction with SMBC is an important step in that journey and underlines our intent on the ESG front.” said Mr. R Shankar Raman, Group CFO & Whole-Time Director of L&T.
Mr. Toshitake Funaki, CEO of SMBC India, said “This transaction supports SMBC Group’s initiatives to contribute to a sustainable society through its financial services. We are delighted to be the Sustainability Coordinator and Lender for this SLL facility to our core client, L&T''.
The stock closed at Rs 2,085.50 per share on Friday.
Article by Aman Agarwal.
