Baring Private Equity Asia (BPEA) has established a sustainability linked loan (SLL) worth up to US$3.2, with initial commitments of approximately US$1.5 billion.
The SLL facility is linked to sustainability performance targets that will reduce the interest rate of the loan if BPEA can achieve the objectives, primarily linked to gender diversity and climate change. The facility will support BPEA's private equity investment platform.
On gender diversity, BPEA will require its portfolio companies to build a stronger and more supportive environment for female talent to thrive.
To meet the climate change-linked targets, BPEA's portfolio companies will improve GHG emissions reporting, set climate targets, and ultimately drive emissions reduction. At the firm level, BPEA plans to create a long-term climate strategy to guide both its corporate activities and engagement with portfolio companies.
A further target is linked to BPEA further strengthening its investment process by integrating enhanced ESG risk and opportunity assessments to inform ESG action plans for each portfolio company.
"We hope this pioneering debt facility will set a precedent for the private equity industry, not just in Asia but globally," said BPEA chief executive and founding partner Jean Eric Salata. "As a longstanding proponent of taking action on ESG, we recognize the correlation between strong, sustainable business practices and value creation. The facility's ambitious targets incentivize our firm and our investee companies to aspire to higher standards while also encouraging long-term thinking on key topics like climate change to drive positive change for the communities in which we operate."
The sustainability coordinators for the facility were BNP Paribas and Standard Chartered.
"Sustainability and ESG permeate the firm and have done so since its inception," said BPEA COO Patrick Cordes. "We are active owners, and we believe sustainability and ESG help build value in our portfolio companies. This facility will enable us to be more transparent with investors about how we use that approach to drive value for all stakeholders."