Volvo Cars has recently secured two sustainability-linked revolving credit facilities totaling €2bn ($2.1bn) to support its corporate and environmental goals. The first facility, valued at €1.5bn, will refinance an existing €1.3bn credit line and has a five-year term with options to extend for two additional years. This facility, backed by a consortium of 22 banks, will serve as a backup for general corporate purposes.
The second facility, amounting to €500m, is a three-year revolving credit involving specific Nordic banks and also includes two one-year extension options. Like the first facility, this one is intended for general corporate use. What sets both credit facilities apart is that the interest rate margin is linked to Volvo Cars’ success in reducing carbon emissions across its value chain. Additionally, there is a performance metric related to reducing water consumption, aligning with the company’s circular economy goals.
Key coordinators for the €1.5bn facility include BNP Paribas, Credit Agricole Corporate and Investment Bank, DNB Bank ASA, and SEB, with Credit Agricole serving as the sustainability coordinator and Swedbank as the agent.
This move by Volvo Cars highlights the company’s commitment to sustainability and reducing its environmental impact. By tying its credit facilities to specific sustainability goals, Volvo Cars is not only aligning its financial strategies with its environmental objectives but also setting a precedent for other companies to follow suit. This innovative approach to financing underscores Volvo Cars’ dedication to corporate responsibility and sustainable practices.
