Company A

Sustainability Linked Loan

[15/01/2024]
Company A
Introduction

● Company A is a large multinational clothing manufacturer and retailer.

● The company need funds to make several investments across its supply chain and operations to meet
a key sustainability goal: reducing its freshwater usage by 50% by 2030.

● This will include investing in new technologies and using more sustainable fabric fibres.

● Company A’s ESG strategy focuses on three pillars:

○ Reduce greenhouse gas (GHG) emissions
○ Strengthen water stewardship
○ Elevate worker well-being
Reduce greenhouse gas (GHG) emissions
Target
● Reduce absolute GHG emissions in our company-operated facilities by 90% by 2030.
○ Achieve 100% renewable electricity in those facilities by 2030. Electricity makes up 68% of the total
company-operated energy footprint, so achieving our goal of 100% renewable electricity in our own
facilities will help reduce our overall impact.
○ A smaller portion of our energy (32%) is from natural gas, which we plan to reduce through efficiency
improvements and biogas credits.

Analysis
At the close of our 2021 fiscal year, renewable electricity accounted for 90% of the total electricity used at
our company-operated facilities.
● Company-operated facilities include 1,040 retail stores in 45 countries, 65 offices (including
administrative and sales offices and data centres), 15 distribution centres, and two manufacturing
plants. Emissions from our company-operated activities make up 25% of our carbon footprint. In 2021,
we achieved a 66% reduction in emissions from the 2016 base year, keeping us on track toward our
goal of a 90% reduction in absolute emissions associated with all company-operated facilities by 2030
Strengthen water stewardship

Target

● Reduce freshwater use in manufacturing by 50% in areas of high water stress by 2030.

Analysis
● In 2021, we reported a 22% reduction in water use (against the base reporting year of 2016) by means
of a water stewardship programme (launched in 2010), which included new garment finishing techniques
and water recycling guidelines. These have now become standard for the industry.
Elevate worker well-being

Target

● Continued improvement in worker health, satisfaction, and engagement as measured via our in-person
factory assessments.

Analysis
● Due to challenges with COVID-19 and entry restrictions into China, we have been unable to conduct as
many factory assessments as planned. In 2019, we had a completion rate of 95%. However, this dropped
to 5% in 2020 and 10% in 2021. We are committed to increasing this figure as travel restrictions ease.
Conclusion

Recommendation

● For Company A, Reducing GHG Emissions and strengthening water stewardship are
the most appropriate pillar to focus on with regards linking the terms of the loan.