Financial institutions also have their roles to support the responsibilities of industry-leading companies. Although an unexpected area to consider sustainability, banks are capable of incentivising change through loans and project funds.
Following the release of its updated sustainability strategy, Building New Futures, Balfour Beatty has secured an agreement to convert £375mn of its revolving credit facility—which allows the firms to withdraw funds that have been repaid as part of the loan amount—to a sustainability-linked loan. The terms of the loan require Balfour to provide proof of annual performance improvement of its carbon emissions, social value generation, and an independent environmental, social and governance (ESG) rating, regulated by an ESG research company, Sustainalytics.
The company’s Chief Financial Officer, Phil Harrison discusses Balfour’s long-term commitment to sustainability through the loan. ‘Balfour Beatty has long been at the forefront of sustainability in the construction sector, with clear targets and ambitions as set out in the company’s Group Sustainability Strategy. We are delighted to further demonstrate our commitment [through] this new sustainability linked loan. [...] We appreciate the support of our international bank group and the confidence this commitment reflects in Balfour Beatty’.
Lloyd’s Bank has also commented on the role of finance in the agreement. We’re proud to have worked with Balfour Beatty’s international bank group to fund and co-ordinate the largest sustainability linked loan in the UK construction industry’, says Max Jones, Infrastructure and Construction Director.
‘With the sector’s drive to becoming more sustainable, critical to the UK’s net-zero ambition, this is an important development for the industry as a whole. Acting as the sole Sustainability Coordinator and the Facility Agent signals our commitment to the industry and our support for Balfour Beatty to reach its ESG goals’.
Balfour Beatty’s ESG progress
Balfour’s sustainability strategy highlights the company’s ambitious goals to build carbon neutrality into its business and go beyond this to become carbon negative. The business will also focus on mitigating commercial waste, with its 2030 target to reduce 40% of its waste.
In terms of social development, the organisation is implementing processes to generate £3bn of social value by 2030, through teaching in the UK, creating jobs in the US and encouraging wellness in Hong Kong as a joint venture with Gammon—a Hong Kong construction company.
For more sustainability insights, check out the latest issue of Sustainability Magazine.