ING creates world’s first sustainability improvement fund financing
Just two months after ING introduced the world’s first sustainability improvement derivative, it announced another product aimed at encouraging companies to get measured on environmental, social and governance (ESG) goals. Its sustainability improvement capital call facility for Singapore-based Quadria Capital Management is the first in the world to link the interest rate of the private equity fund to the sustainability performance of its portfolios.
The $65 million three-year revolving capital call facility is the first of its kind in the global fund finance industry which is currently worth $400 billion, according to Preqin, a leading data source for alternative assets (investments that are not considered mainstream). The facility pegs the interest rate of Quadria to ESG performance targets set on the fund’s investment activities.
The set of ESG metrics is based on key performance indicators provided by B Analytics, a data platform that measures impact for investors, fund managers, and individual companies; Quadria’s own ESG framework; and an independent materiality assessment. The client’s interest rate will go down if B Analytics’ yearly assessment proves that Quadria is meeting its sustainability targets.
The sustainability improvement facility is the third financial product ING launched to help improve the sustainability performance of clients. In 2017, ING was the first financial institution globally to launch the concept of a sustainability improvement loan when it collaborated with health technology company Philips on a €1 billion syndicated loan that had the interest rate coupled to the company’s sustainability performance and rating. It has participated in 67 since then.