Accelerating the decarbonisation of UK social housing - BNP Paribas CIB
 
Thursday 10 December 2020

BNP Paribas supports sustainability-linked loan on decarbonisation with Metropolitan Thames Valley (MTVH), one of the UK's largest housing associations.


Building stock accounts for approximately 30% of the UK's greenhouse gas emissions, and supporting decarbonisation of housing through sustainable finance is an important step in scaling up the transition towards a low carbon economy. BNP Paribas has been a pioneer in helping housing associations to align their financing needs with sustainability objectives, and is now extending the approach to decarbonising the sector, with a new £50mn sustainability-linked loan for MTVH.
"MTVH has demonstrated that funding structures, commercial strategy and the demands of the climate crisis need not be at odds."

Anne Marie Verstraeten, UK Country Head

The three-year revolving credit facility is believed to be the first Risk Free Rate (RFR) sustainability-linked loan in the sector, whereby the interest margin is tied to MTVH achieving environmental targets of reducing greenhouse gas (GHG) emissions linked to energy consumption from both its offices and transport, as well as its residential portfolio. 

MTVH's sustainability linked loan supports their progressive decarbonisation strategy. To date this has included implementing measures to improve energy efficiency through new technologies, aligning supplier environmental targets to a sustainable procurement policy and operational climate footprint monitoring. The housing association is also at the forefront of measuring its environmental footprint, and has a progressive carbon emissions reduction strategy that discloses both Scope 1 (direct) and Scope 2 (indirect) carbon emissions. 

"We're committed to supporting the decarbonisation of social housing in the UK, and this innovative loan with BNP Paribas is one of the ways in which we're playing our part. By meeting sustainability targets to help fund our business we can cut the cost of our debt, further build our financial strength and free up more funds to achieve our ambition of providing more affordable homes and supporting our residents and customers to live well," says Donald McKenzie, Director of Corporate Finance at MTVH.

"MTVH has demonstrated that funding structures, commercial strategy and the demands of the climate crisis need not be at odds. As an active member of the Coalition for the Energy Efficiency of Buildings, BNP Paribas knows that decarbonising the built environment is essential for achieving net zero in the UK. In MTVH we found a partner whose understanding matches our own," says Anne Marie Verstraeten, BNP Paribas UK Country Head. 

BNP Paribas innovating on sustainable finance in the housing sector

BNP Paribas has been leading on efforts to embed social impact into finance through SLLs for Housing associations and education leaders, and has supported various innovative financings including: 

  • In August 2019, BNP Paribas supported housing association Peabody in a £75m SLL in which Peabody will benefit from a lower interest rate margin on the loan if it delivers an agreed number of accredited childcare qualifications under its Childcare Training Programme. This target rises incrementally over the 5- year life of the loan.
  • In January 2020, the bank helped Clarion, UK's largest housing association, secure a new 5-year £100m SLL linked to a lower interest rate margin on the loan, if it helps an agreed number of residents into employment.


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