Inside Housing – News – UK’s largest housing association accepts £ 100million sustainable loan
Clarion Housing Group has secured a £ 100million loan from NatWest, the interest rate of which will depend on the association’s ability to meet environmental, social and governance (ESG) goals.
Divide lines
NatWest will assess Clarion against its “Social Key Performance Indicator” (KPI), which will measure social value in the group’s supply chain. The second KPI attached to the agreement will measure the number of apprentices hired on Clarion sites.
If Clarion creates a fixed amount of social value and places an agreed number of apprentices, it will benefit from a lower interest margin on the loan.
The transaction follows two previous ones sustainability obligations issued by Clarion in January and November last year, valued at a combined £ 650million.
Clarion, which owns and manages 125,000 housing units, was one of the first social housing funders Sustainability reporting standard launched last year and separately produced his own ESG report for investors.
The loan is also Clarion’s first facility linked to the interest benchmark Sterling Overnight Index Average (SONIA), which will replace the London Interbank Offered Rate (LIBOR) at the end of this year.
SONIA is a method of calculating interest rates based on yesterday’s transactions, while LIBOR is based on forward projections made daily by experts.
Patrick Minjauw, Acting Director of Treasury and Corporate Finance at Clarion, said: “We can maximize the social value we deliver and help communities truly thrive by working with our partners.
“Our social value program engages our suppliers to help us achieve our social goals. We are delighted that banks such as NatWest recognize the impact of this program and provide financing at a lower interest rate. “
Hedley Hadfield, Director of Housing Finance at NatWest, said: “Providing a sustainability loan is a great way for the bank to help Clarion in its priority of supporting the communities it works with. Having two separate KPIs is something that we are starting to see more and more in the social housing industry, ensuring that any benefits we can pass on to borrowers are maximized.
The Clarion funding is part of NatWest’s recent commitment to support the housing association industry with £ 3 billion in new funding by the end of 2022.
Update at 4:40 p.m., 04/06/21:
This story has been edited to clarify that Clarion has previously issued sustainability bonds, not “sustainability related” bonds as previously stated.
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