Mace has secured two sustainability-linked loans worth a combined £60m to support its overseas growth and environmental projects – one of the biggest deals of its kind, according to the firm.
Through an agreement with Spanish bank BBVA, Mace has clinched two “ESG-linked liquidity financing facilities”, with the largest worth £50m and financed by JP Morgan through the Export Development Guarantee (EDG), and supported by UK Export Finance (UKEF).
The second facility is a £10m revolving credit facility signed by BBVA. The Spanish bank acted as sustainability co-ordinator for both facilities.
The loans are linked to three environmental, social and governance (ESG)-led KPIs, which measure the firm’s performance on carbon reduction, increasing the use of renewable energy, and improving health and safety performance.
Mace’s work against these KPIs will be tracked, influencing the interest rate paid on the facilities, with the deal intending to further incentivise the company to deliver its targets for ESG performance.
It represents another major agreement for construction firms that have recently sought different methods to finance work towards becoming more environmentally responsible.
Mace group chief financial officer Richard Bienfait said: “We are delighted to be entering into this agreement with BBVA and JP Morgan, which will support our growth overseas and our important sustainability priorities.
“As a purpose-led business, Mace is committed to ensure that we do everything we can to pursue a sustainable world – and this landmark financing arrangement reflects that ambition.”
Elena Guillem, global relationship manager for Mace group at BBVA UK, said the Spanish bank was “thrilled” to work with Mace, and to help it find “coherent financing alternatives” to assist with its commitment to add value to society and the environment.
JP Morgan global head of export and agency finance John Meakin added: “We are delighted to achieve this ‘first’ with Mace, BBVA and our long-time ECA partner, UKEF, which builds on the firm’s strategy to support the transition to a lower-carbon economy.”
Mace announced last year that it had achieved net-zero carbon status in 2020, through a significant reduction in emissions from its own operations and the use of gold-standard carbon offsets.
The company has committed to maintaining its net-zero position, reducing its operational carbon and working with clients to remove more than a million tonnes of carbon from the work it delivers on their behalf by 2026.
Liquidity financing facilities give companies the option of borrowing money at short notice, but do not register automatically as debts on financial accounts, instead acting as a reserve pot of money.
These sustainability-linked loans can be linked to certain KPIs that focus on the borrower’s general activity rather than a specific project.
In October 2021, Balfour Beatty announced that it had secured the sector’s “largest sustainability-linked loan”, worth £375m. This was after it converted its existing revolving credit facility.
In the same year, Willmott Dixon secured a revolving credit facility worth £50m, tied to its net-zero carbon commitments.