Wates commits to more leadership roles for women as part of £90m loan terms

Wates has made a commitment to appoint more women to senior roles, as a condition attached to a £90m loan.

The contractor secured a three-year sustainability-linked loan, facilitated by a syndicate led by Lloyds Bank along with HSBC and AIB, which each put in £30m.

The terms of the loan require that the margins on which it is borrowed are linked to three key performance indicators (KPIs).

The first KPI is attached to Wates’ diversity strategy, which sets out plans to increase the number of women in senior leadership positions at the firm. This effectively means that its lending margin will be reduced if the business appoints more women to leadership roles.

The second KPI requires Wates to ensure that its supply chain is committed to improving sustainability in construction. To meet this KPI, Wates must demonstrate that 35 per cent of its most-used 200 suppliers have approved Science Based Targets initiative (SBTi) metrics in place by December 2024.

Meanwhile, the third KPI is tied to delivering on social value commitments. Wates has said it will generate about £370m worth of social value over the next three years by creating jobs and encouraging a healthier lifestyle among the communities in which it works.

It is not the first time that Wates has committed to improving the gender balance in the company. Earlier this month, to mark the firm’s 125th anniversary, it announced a programme to bring 125 women into the construction industry by 2025, across all levels of the business. Wates is working with the gender-equality non-profit Women into Construction (WiC) to deliver four employment schemes over a two-year period, to provide training and jobs for women at all stages of their career.

Wates Group chief financial officer Philip Wainwright said: “We are continually reviewing how we can embed sustainability into what we do, and we’re pleased that we have been able to identify and agree on three additional metrics with our lenders that will drive sustainability outcomes.”

The Wates loan is the second-largest loan in the construction industry of this nature. In October last year, Balfour Beatty took a £375m sustainability-linked loan, which was provided by a 10-bank syndicate, also led by Lloyds Bank.

Meanwhile, Willmott Dixon took out a £50m sustainability-linked loan, facilitated by HSBC, in May 2021.

According to Office for National Statistics data published last month, women hold 16.2 per cent of  senior roles within the construction sector, up only marginally on the 16.1 per cent total recorded in 2011.

Sustainability-linked loans

Sustainability-linked loans are a form of socially responsible finance that focus on the borrower’s general activity rather than a specific project.

The UK’s Loan Market Association, in conjunction with similar bodies across the globe, has produced a set of guiding principles for this type of lending.

Essentially, sustainability-linked loans look to improve a borrower’s social responsibility profile over the repayment period by aligning the cost of borrowing to performance measured using stated indicators, such as carbon-emissions reduction or increasing the number of women in senior roles.

Legal firm Herbert Smith Freehills predicts that this type of finance arrangement will “fast become the norm” amid the global economic recovery from COVID-19.

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