European real estate investor Eurocommercial Properties N.V. (ECP) is the first buyer of ABN AMRO’s newly available sustainability-linked derivative. By purchasing the derivative, the company hedges the risk of rising interest rates on its financing.
The interest rate ECP will be paying will partially depend on how well they score on their sustainability targets, as the interest rate on the derivative can rise and fall according to the company’s performance in this area.
Martin Kroes, ABN AMRO: “This is one of the ways we’re encouraging clients to keep going from green to greener. These sustainability-linked derivatives are a welcome addition to the sustainability-linked loans we were already offering. With this transaction, ECP now has both in their portfolio.”
ECP has set multiple such targets for its real estate portfolio, on subtopics like renewable energy, reducing waste streams and sustainability ratings of its buildings. That last aspect also enhances the properties’ value retention: greener buildings are more future-proof, which adds to their fundability.
Roberto Fraticelli CFO of ECP: “We are delighted to have entered into our first sustainability-linked derivatives on the back of sustainability-linked loans with ABN AMRO. We have enjoyed a very long term relationship with ABN AMRO who are one of the few banks to offer Sustainability-linked Derivatives. Adding sustainability-linked hedges to our portfolio enable us to further integrate our ESG targets with our operating business.”