Education giant will be rewarded with lower interest rates if it can get more children studying
Education giant Pearson is pioneering a new method of using financial incentives to drive progress on education targets set out under the UN's Sustainable Development Goals (SDGs), it revealed yesterday.
The firm agreed a $1.19bn Revolving Credit Facility at the end of last month, under which interest rates will be linked to its performance against SDG4, the UN SDG targeting universal access to education.
An RCF is a lending structure that allows for the loan amount to be withdrawn, repaid, and redrawn again in any manner and any number of times, until the arrangement expires.
Pearson's loan, due to mature in February 2024, is believed to be the first of its kind in the world to link margins to education, although similar lending structures are becoming more popular among corporates as a means to incentivise progress in areas such as carbon emissions reduction.
"It is pleasing to see the alignment between finance and sustainability with our refinancing marking Pearson's debut of an education linked loan in line with our mission of helping people make progress in their lives through learning," said CFO Coram Williams.
In related news, earlier this week US-based water technology company Xylem agreed a new $800m RCF which links interest rates to Xylem's overall sustainability performance as rated by ESG assessor Sustainalytics.
"We are excited to be the first water technology company in the US to secure a sustainability-improvement loan that rewards our continued efforts to integrate sustainability and social value creation across our operations, and helps advance our strategy and mission to solve global water challenges," said Mark Rajkowski, senior vice president and CFO of Xylem.
NB: This article was amended on 07/03/19; the original story gave incorrect figures for the value of the RCF