Japanese shipping company NYK announced it has secured a syndicated sustainability-linked loan, Japan’s first advanced loan that allows for conditions such as the loan’s interest rate to be adjusted according to the borrower’s CSR performance.
This loan by MUFG Bank Ltd. encourages sustainable economic activities and growth by linking loan pricing to company performance, which is determined by the score provided by CDP (formerly Carbon Disclosure Project) annually.
As long as high CDP ratings are maintained, the company’s CDP score will not cause the loan’s interest rate to change prior to the repayment deadline, NYK explained.
In accordance with the new medium-term management plan ‘Staying Ahead 2022 with Digitalization and Green’ announced in 2018, NYK integrated Environmental, Social and Governance (ESG) principles into management strategies to drive the sustainable development of society and enrichment of the company’s corporate value. Under the same plan, in April 2018, NYK became the first to publish green bonds in the international shipping industry.
The company namely achieved a place on the Climate Change A List in 2018. About 7,000 companies publicly disclose environmental information through CDP yearly, and 139 companies are on its A List, including 20 Japanese companies and NYK.
The purpose of this loan is for NYK to promote its ESG management and motivate the company to maintain a high CDP score by responding to climate change through business activities.
This loan has obtained third-party opinions from Japan Credit Rating Agency Ltd. (JCR) for the loan’s rationality and compliance with the Sustainability-Linked Loan Principles published by the Loan Market Association (LMA).
The loan period is for five years, starting from 29 November 2019 to 29 November 2024.
Since 2003, CDP has been sending out questionnaires every year to major companies around the world to collect corporate environmental information, such as carbon emission amount and actions for climate change, to assess management risk related to climate change. CDP then uses a standardized methodology to give each company a score.
