Mall and leisure specialist Majid Al Futtaim has inked its second sustainability-linked loan (SLL), which has been structured as a US $1.25bn revolving credit facility (RCF) linked to its environmental, social and governance (ESG) related targets.
The SLL aims to facilitate the reduction in the company’s carbon footprint by reducing its scope one & scope two emissions, and implementing LEED certification for its buildings, as well as improving gender diversity within the organisation demonstrating its commitment towards the environment as a socially responsible employer, the organisation said.
First Abu Dhabi Bank (FAB) led the transaction as sustainability coordinator and agent. In line with Majid Al Futtaim’s ambitious sustainability strategy, the company has set sustainability performance targets (SPTs) which will be measured on an annual basis throughout the tenor of the facility, it explained.
In June 2021, the firm said that it achieved 97% of its 2020 sustainability goals.
The facility is said to position Majid Al Futtaim as the largest SLL borrower in the region. In addition, the company notes it remains the region’s only ‘penalty-only’ borrower, demonstrating its commitment to achieving real, tangible sustainability targets.
“Sustainable finance options are a vital solution in the quest to ensure the private sector creates a resilient economy and supports development that meets the needs of the present without compromising the future. Today’s announcement maintains Majid Al Futtaim’s long-held commitment to becoming one of the most sustainably considerate companies regionally and globally,” said Ziad Chalhoub, Chief Financial Officer at Majid Al Futtaim Holding.
He added, “Through the new SLL, we are further extending our accountability in how we finance our operational and capital expenditures across the group. As our second such SLL signed in as many years, we are aligning our actions with our long-term strategic target of reaching a Net Positive business model by 2040.”
In August 2021, Majid Al Futtaim signed its first SLL worth $1.5bn.
Mustafa Al Khalfawi, Head of Global Banking UAE & Global Head of Government, Sovereigns & Public Sector at FAB remarked, “We are proud to lead this transaction with Majid Al Futtaim and to support a key UAE entity in achieving its ambitious sustainability targets. FAB is the region’s leading bank for unlocking innovative sustainable finance solutions, having issued the first green bond in the GCC in 2017 and as the first UAE bank to commit to achieving net-zero greenhouse gas emissions across our operations and portfolio. There is strong and growing demand for sustainability-linked banking facilities from UAE and GCC corporates, and we are working closely with our clients to drive positive environmental outcomes.”
The facility is said to be structured on the basis of three key performance indicators (KPIs), which will be independently assessed on an annual basis. The KPIs for the facility are billed as “ambitious” and core to Majid Al Futtaim’s operations and in line with SLL Principles as published by the Loan Market Association (LMA) as follows:
- Reducing the scope one and two emission intensity of Majid Al Futtaim’s property portfolio, calculated as tCO 2 e/managed sqm, in line with the company’s science-based targets (SBTi) towards net positive by 2040
- Having all its malls certified LEED Gold or equivalent or better by 2026. In addition, the company has set a target of increasing the number of malls in Majid Al Futtaim’s portfolio with a LEED Platinum or equivalent rating by 2027
- Achieving 32% of women in the top three seniority levels (board, senior executive and senior management) by 2027, exceeding the previous 30% target set on the company’s existing SLL
In June 2022, Ibrahim Al Zubi, Chief Sustainability Officer at Majid Al Futtaim Holdings spoke to Gavin Davids about why incorporating sustainable practices is the only way to do business.