GrandVision reinforces its commitment to responsible and sustainable business practices with a Sustainability Linked Loan
For GrandVision, responsibility and sustainability are more than buzzwords—they are a shared mindset across all departments and operations. And signing a Sustainability Linked Loan in 2019 reinforced the commitment of the company to advance its environmental, social and governance (ESG) performance.
In the business world, sustainability is increasingly moving from “nice to have” to an essential business practice. As this continues to evolve, investors, customers, regulators, employees, media and NGOs demand more information about a company’s social and environmental performances, especially regarding finance and strategy. And, non-financial factors are gaining more importance during the investment analysis process. From the very beginning, GrandVision has embraced the topic of Corporate Responsibility and Sustainability as a shared mindset, not only as a department. This involved instilling a sense of responsibility and accountability within all strategic departments, from People & Culture to Product Value Chain, and even Finance.
“Responsibility and sustainability are more than buzzwords – they are a shared mindset.”
Needless to say, this shared mindset has been instrumental in advancing GrandVision’s sustainability agenda, which GrandVision’s CFOs and Finance department leaders have spearheaded.
“GrandVision’s CFOs have always played a key role in our sustainable development and promoting strong ESG values across the entire organization. They always understood the importance of the company’s social and environmental impact, and supported its translation into quantifiable metrics that we can use to track and report progress. In fact, our Treasury Department suggested to use the ESG-feature in our revolving credit facility—a novelty in the financial market that few companies have so far. This also made us one of the first retailers to explore this opportunity,” shares Darina Elencheva, Head of CSR at GrandVision.
What are Sustainability Linked Loans, and how do they work?
Sustainability Linked Loans, or ESG Linked Loans, are general corporate purpose loans used to incentivize borrowers’ commitments to sustainability and to support environmentally and socially sustainable economic activity and growth. To comply with loan stipulations, borrowers follow the Sustainability Linked Loan Principles. Issuers can potentially lower the cost of borrowing by working with banks that integrate a company's sustainability performance into their lending criteria.
“Successful results already during the first year.”
Robert Lenterman, GrandVision Treasury Director, explains, “Exploring innovative ways to structure our financing has always been part of our agenda. While we were dealing with our banks negotiating our Revolving Credit Facility in July 2019, we reached out to our Sustainability department exploring ways to add an ESG feature to the financing, whereby the cost of our financing would be linked to our Sustainability performance. For that purpose, we partnered with Sustainalytics, a leading ESG research, ratings and data firm, enabling our Sustainability performance to be independently externally measured. The resulting condition under our Revolving Credit Facility was simple: If we would improve our Sustainalytics ESG Score by more than 4 points – we would receive a 2.5 basis point discount on our revolving credit facility margin. We are proud to say that we managed to achieve this already during the first year.”
“Sustainable business strategies deliver sustainable financial returns.”
As stakeholders continue to demand more information about the impact of financial and non-financial risks and opportunities, CFOs and Finance departments must take the lead in setting and driving sustainability strategies consistent with business strategies. In turn, this will deliver sustainable financial outcomes and create value over the long term.
Willem Eelman, GrandVision CFO, concludes: “Corporate Finance teams are key participants in a business's sustainability journey. Sustainability is not a choice anymore—it’s a norm, and sustainable practices have been shown to save organizations money and create long-term business value. It is my responsibility, as well as the responsibility of our other CFOs and Finance teams, to look at combining the best methods to measure and monitor sustainability progress within our organization. It is also our responsibility to promote strong ESG values across the entire GrandVision Finance community. Luckily, I have a strong, forward-looking team on my side that takes initiative and stays on top of financial and sustainability trends.”