Siemens Gamesa, a specialist in wind power, has broken new ground with its debut sustainability-linked syndicated guarantee facility for €600 million. The facility, which supports the construction of components for the world's largest offshore wind farm, incorporates a dual environmental and social sustainability purpose. (BNP Paribas acted as Sustainability Global Advisor and Mandated Lead Arranger.)
Siemens Gamesa's €600m inaugural sustainability-linked syndicated guarantee facility shows how firms can use the tools of finance to help pioneer change.
" Accelerating environmental and social impact through trade finance mechanisms is an important step in embedding sustainable finance into the way we can support corporates and investors to achieve their sustainability ambitions. "
Deploying a novel sustainability-linked mechanism – a first in the trade finance space – Siemens will pay a premium if it fails to achieve the defined ESG targets. Should it meet those targets, the premium will be paid by the banks on the syndicated guarantee facility. In either case, the established premium is used to support a cancer research project at the Hospital La Paz Institute for Health Research in Madrid, Spain.
The environmental impact on the guarantee facility is achieved through enabling the construction of components for the world's largest wind farm owned by Ørsted, a Danish power company, providing renewable energy to over one million homes. The facility allows Siemens Gamesa to supply and install 165 wind turbines in the North Sea.
The premium supports the United Nations Sustainability Development Goal (SDG) 3, Good Health and Wellbeing, providing resources for an early breast cancer detection research programme led by Dr Eduardo López-Collazo, Scientific Director at the Institute.
Siemens Gamesa further underlines its status as a pioneer in sustainable finance. Its novel transactions in the past year include a €174million sustainability-linked FX hedge and a three-year interest rate swap, in which BNP Paribas reinvests the premium into reforestation projects. In addition, it completed a €2.5 billion sustainability-linked syndicated facility in December 2019 (BNP Paribas was Sole Sustainability Agent).
Thomas Spannring, acting CFO of Siemens Gamesa said: "This deal is a continuation of Siemens Gamesa's focus on sustainability in finance and strengthens it at a difficult time for all of society, in which we must go that extra mile in supporting medical research. It is very gratifying to be able to make a contribution."
Dr Eduardo López Collazo, Scientific Director of Hospital La Paz Institute for Health Research said: "We are in the midst of an emergency — one in which science has taken on a very prominent role, in both political and social terms. After Covid-19, there will still be other health problems that were here before and will not have gone away. My group has been seeking an explanation for metastasis for the last two decades; it's a task that needs funding, and one whose success is synonymous with life."
Rodolphe Vergeaud, Head of CIB EMEA Trade & Working Capital Solutions, BNP Paribas said: "Accelerating environmental and social impact through trade finance mechanisms is an important step in embedding sustainable finance into the way we can support corporates and investors to achieve their sustainability ambitions. The current healthcare crisis requires solidarity, and the partnership with Siemens Gamesa highlights how social objectives and promoting a green recovery can be aligned."