Forestry giant secures revolving credit facility with BNP Paribas to help drive sustainable forest management initiatives
Finnish forestry business UPM has become one of the first businesses in the world to link repayments on a €750m loan to its performance against long-term biodiversity and climate targets.
The company announced yesterday that it has become the latest firm to take advantage of a syndicated revolving credit facility (RCF) with the pricing mechanism linked to its biodiversity and climate targets. The margin of the RFC is tied to two key performance indicators (KPIs): the achievement of a net positive impact on biodiversity in the company's own forests in Finland; and a 65 per cent reduction on CO2 emissions from fuels and purchased electricity by 2030 against 2015 levels.
Tapio Korpeinen, chief finance officer of UPM, said that connecting UPM's sustainability performance to its financing demonstrated the importance of responsible business practises to long-term value creation.
"Sustainable forest management plays an important role in mitigating climate change, as it ensures material long-term CO2 sequestration and improves adaptation to global warming," he said.
UPM has developed a range of indicators and methods to monitor a net positive impact on biodiversity, he added.
Marjo Liukkonen Lazaro, head of BNP Paribas Finland said "promoting biodiversity through finance is an essential lever in tackling the climate crisis".
"This transaction highlights the positive role of sustainable finance to link to progressive decarbonisation targets, which can jointly protect ecosystems," he added.
The deal is the latest in a series of RCF loans with leading corporates from the French banking giant as it looks to incentivise businesses to improve their environmental performance while reducing long term climate-related risks across its loan book.
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