Britvic Announces First Sustainability-linked Financing Deal
Britvic has agreed its first sustainability-linked credit facility, allowing it to borrow up to £400 million over the next five years whilst linking the margin of the facility to its sustainability goals. The five-year facility, which can be extended by a further two years, was co-ordinated by Rabobank and has been provided by a group of seven lenders.
The facility is linked to the progress Britvic makes against three sustainability targets. The better Britvic performs against these targets, the further the margin will reduce.
Britvic has committed to reaching these targets by 2025 under the terms of its sustainable business strategy. Britvic’s sustainability targets include:
- 50% of all plastic bottles in Great Britain and Ireland to be made of recycled plastic (rPET)
- 50% reduction in carbon emissions (when compared to 2017)
- 75% of the drinks portfolio globally to be either low or no sugar.
In what is one of the first agreements of its kind in the UK, Britvic or the lenders will donate the proceeds from any change in margin to charitable causes.1
Sarah Webster, Sustainability Director at Britvic, says: “This financing agreement is part of our commitment to embed sustainability at the heart of our business and drive real behaviour change. We’ve made progress against our sustainability ambitions, however there’s more to do and this is a significant commercial milestone in our journey. By linking financing to our goals, we can ensure that every penny we invest is done so with our sustainability targets in mind.”
Alastair Cameron, from Rabobank’s London-based loan syndications team, says: “Sustainability-linked financing has been a growing trend for several years but this facility, which will see Britvic donate the discount proceeds to charity, is one of the first of its kind in the UK market. Sustainability was the key theme of last year and it will continue to dominate the agenda in 2020. Linking funding to metrics like developing a healthier product portfolio and recycling more plastic packaging is one way corporates like Britvic can continue to show leadership to make business more responsible and sustainable.”
This credit facility represents a significant step forward on Britvic’s journey to operate as a fully sustainable business. As a founding signatory of The UK Plastics Pact in 2018, Britvic committed to strict targets which aim to transform the plastic packaging system in the UK and keep plastic in the economy and out of the environment. Already, all Britvic’s plastic bottles, glass bottles and cans are 100% recyclable.
As well as ensuring Britvic’s packaging is recyclable, Britvic is investing in the recycling infrastructure needed in the UK. Each year, Britvic invests £850,000 in UK recycling infrastructure through its 2018 commitment to only purchase domestic Packaging Recovery Notes (PRNs) from UK recyclers. More recently, Britvic entered into a long-term agreement with Esterform Packaging Limited for the supply of recycled plastic (rPET), providing £5 million worth of investment towards the construction of a new rPET facility in North Yorkshire.
The business has also announced targets to reduce its carbon emissions and keep the global temperature rise to within 1.5°c. These targets were independently verified by the Science Based Target initiative. The targets follow an announcement in October 2018 to run all Britvic’s GB manufacturing sites on 100% renewable electricity.
As part of Britvic’s long-term commitment to health, 99% of its GB owned brand portfolio, which includes Fruit Shoot, Robinsons, J2O and Tango, is low or no sugar.
Britvic was advised by KPMG on this facility. Rabobank acted as sustainability co-ordinator, documentation agent, facility agent and mandated lead arranger on this facility.
1If Britvic meets two or three of its sustainability targets the margin will decrease and Britvic will pay any saving to charity. If Britvic meets one target the margin will remain unchanged. If Britvic fails to meet any of the three sustainability targets the margin will increase and the lenders will pay the difference to charity.
