Manufacturing & Supply Chain

In the first loan of its kind, Sainsbury’s announced today (21 July) an agreement with Lloyds and Rabobank for a £200m corporate ‘green loan’ to invest in its carbon reduction and sustainability projects.

Green Bonds are increasingly issued by institutions to support green initiatives, but this is the first time a commercial loan has been structured to do the same.

The loan was structured with the Green Bonds Principles 2014. It works as a conventional corporate loan, but is underpinned with clear environmental commitments to ensure Sainsbury’s uses the loan proceeds specifically for environmental, sustainability and water projects.

The news comes on the same day that Sainsbury’s begins powering its Cannock store in the West Midlands entirely off-grid via anaerobic digestion. Plans for the plant, run by waste management firm Biffa, were reported by edie last month. The plant goes live today following the installation of a 1.5km cable to the store, which will be powered by energy generated from Sainsbury’s food waste.

Sainsbury’s chief financial officer John Rogers said: “This £200m Green loan – which is the first of its kind in the UK – demonstrates our commitment and leadership in carbon reduction and sustainability, and shows the value we attach to environmental improvements as demonstrated by our award winning Project Graphite programme.”

Emissions targets

Launched in 2011, Sainsbury’s Project Graphite aims to invest up to £1bn in energy efficiency and renewable energy, such as LED lighting, renewable heat, biomass boilers and solar panels. Sainsbury’s is targeting a reduction in operational carbon emissions by 30% absolute and 65% relative compared with 2005 and achieving zero waste to landfill by 2020.

“We have a proud record in reducing the environmental impact of our operations by investing in low and zero-carbon technologies and energy efficiency programmes,” added Rogers. “For example, our current absolute electricity use is over 12% lower than in 2007/08, despite around 35% growth in floor space.

“The green loan will be used to fund clean energy generation, energy efficiency and water saving projects over a period of two to three years.”

Lloyds and Rabobank arranged the loan with Sainsbury’s and it was accredited ‘Green’ by environmental analysts Sustainalytics. Lloyds Bank’s commercial banking managing director James Garvey said: “As an organisation, Lloyds Bank is committed to responsible business. We have supported several companies bringing green bonds to market and earlier this month issued our own Environmental, Social and Governance bond.

“We are delighted to have utilised this expertise working with Sainsbury’s to create the first green loan and look forward to this market developing further.”