Working closely with mining and resource companies for the past 20 years, Refinery has seen the ebbs and flows of global market demand for our clients’ products and how these movements have affected their budgets for learning and development. It’s no secret that even the most progressive learning-and-development-focused organization can view things like leadership development as an expendable luxury during lean times. Sustainability Linked Loans (SLLs) many times can be the solution for organizations that have a strong commitment to health and safety (including psychological safety) and diversity, equity and inclusion (DEI) initiatives as part of their ESG (Environmental, Social and Governance) commitments.
Recently BMO Financial Group announced a new $5 Billion SSL-structured financing deal with Teck Resources, enabling Teck to link its ESG goals and financing arrangements – underscoring Teck’s commitment to net zero, gender diversity and health and safety initiatives. As part of its commitment to Sustainable Finance, BMO has committed to deploying $300 billion in sustainable lending and underwriting by 2025.
“We’ve made a bold commitment to mobilize $300 billion in capital to clients pursuing sustainable outcomes through green, social and sustainable lending, underwriting, advisory services, and investment. Through our sustainable finance activities, we seek to advance the positive social outcomes expressed in the United Nations Sustainable Development Goals, as well as environmental outcomes that support the transition to a lower carbon economy.”—BMO Sustainable Finance Team, 2021
So, how does an SLL work? And how can you leverage it? A Sustainability Linked Loan is defined as any type of loan instrument that incentivizes borrowers to achieve “meaningful, predetermined sustainability objectives.” (Sustainability-Linked Loans Come to Canada ). Usually, these loans have interest rates that are lower than those of traditional business loans, which make SLLs even more attractive to the organization.
SLLs first were introduced to Canada in 2019, and since that time, they have become the fastest growing part of the ESG finance sector. BMO alone has committed to deploy $300 Billion in SLLs to companies that are pursuing sustainable outcomes by 2025. In terms of how SLL proceeds may be used, borrowers need to clearly communicate their sustainability objectives, and set ambitious sustainability targets that apply over the life of the loan. Unlike “green loans”, SLL proceeds do not need to be used for specific “green projects”, and may be used for general corporate purposes, including initiatives that support improved health and safety conditions via targeted leadership development and creation of an inclusive culture through a customized development approach.
Refinery is a proud member of the Artemis Project, a social enterprise founded on a collective of female entrepreneurs focused on disruptive change in global economic, environmental, and social development in mining. The organization drives innovative business outcomes between female entrepreneurs and mining companies seeking ESG as an imperative for genuine change, improved business performance resulting in an improved world. Heather Gamble, Founder and CEO of the Artemis Project is excited to see the opportunities for SLL funding for mining organizations. “We see Sustainability-Linked Loans as the most important lever to support mining companies in achieving their sustainability goals and pursuing a sustainable future together.”
Creating and sustaining a culture of safety in a mining organization calls for an integrated development approach that combines solid leadership and safety practices. If you are ready to face the real reasons for your organization’s loss in productivity and increase in safety incidents, a partner like Refinery can help you.
Together, we will answer the important questions and create long-term solutions to help get you back on track and achieve better-than-ever results. It begins with changes in leadership characteristics, and results in employee satisfaction and happiness. And who wouldn’t want that?
For more information about Sustainability Linked Loans, talk to your business banking loan representative.