Richard Butler Creagh Shares Why Sustainable Lending is Gaining Traction
Welcome to the Richard Butler Creagh blog. Richard Butler Creagh has been in the bridging lending business for many years. A new generation of sustainability-linked loans is reshaping the market, putting more companies' green goals within reach. Green lending is changing the present financial scene, providing funding to a wide scope of corporates and boosting business to fabricate a progressive and sustainable future and it is continuing to gain traction.
Holistic Sustainability Assessment
Many early green loan structures proved too rigid.
Today's green loans are more holistic. Companies are typically offered "standard" pricing, built around normal risk and credit parameters. Specific key performance indicators (KPIs) are then added to the loan contract. Companies receive a discount as targets are reached. If targets are missed, they pay a premium.
Performance is reviewed by a third party organization and such loans are open to companies of sufficient size and financing requirements, providing they have suitable corporate social responsibility policies in place
Regulation
A recent report by Dutch regulator De Nederlandsche Bank warns of bubbles if regulation and oversight are not developed effectively. Maarten Vleeschhouwer and Henk Jan Reinders, two of its authors, are seeing how green criteria can be joined into oversight systems.
Maarten Vleeschhouwer likewise calls attention to the green supporting factors to bring down the total capital in Europe's banking system. Penalizing factors would do the opposite, making the banking system stronger.
Abb gives the example of a town wanting to switch to LED street lighting. The project could deliver lower emissions but comes with big up-front costs. If the financiers, council, and contractors work together before a deal is signed, they could install electric-vehicle charging points to the lampposts too, ensuring the project generates revenues to mitigate part of the cost.
"Banks can differentiate themselves by their ability to engage and advise their clients on developing impact-based business – in which positive impacts are not an externality but central to the business model itself," says Abb.
Learn more about Richard Butler Creagh, the founder of Henley Finance here. Read more about Henley Finance which is a bridging lender company that invests in UK property here
Watch this video about Henley Finance and what they can offer you:
