HONG KONG, December 2019. Langham Hospitality Investments (1270.HK) has announced that it has closed a sustainability-linked term loan and revolving credit facility amounting to HK$7.5 billion with 11 banks. The syndicated loan consists of a 4-year HK$6.8 billion term loan and a HK$700 million revolving credit facility.
Demands from banks for Langham Hospitality Investments’ new sustainability-linked loan were overwhelming. The syndicated sustainability-linked loan, which is the first raised by a listed company in the Asian hospitality sector, attracted participations by 11 banks in Britain, China, Hong Kong, Japan and Singapore.
The Eaton HK, Hong Kong
Langham Hospitality Group’s current sustainability performance is assessed by EarthCheck, the leading provider of environmental, social and governance (ESG) research and benchmarks for the travel and tourism industry globally. EarthCheck’s assessments will be used as the benchmark against which performance improvements will be scrutinised.
Langham’s CONNECT programme supports the ongoing commitments of the groups CSR pledge. CONNECT identifies four key priorities: Governance, Environment, Community and Colleagues, and they form the framework to address the most relevant corporate responsibility issues to their business.
Stewart Moore, Founder and CEO of EarthCheck said: “Environmental, social and governance performance reporting is now being factored into core business and financial decisions either as a risk for revenue or as an opportunity to support business growth and investment. EarthCheck performance reports provides a perfect platform to support these discussions.”
Ashish Sharma, Head of Loan Syndications for Asia-Pacific, HSBC said: “This is a large, landmark transaction, which demonstrates the growing importance of green and sustainability-linked loans in the financing of Hong Kong’s economy. As the first sustainability-linked loan in the hospitality sector in Asia, it is also further evidence that Hong Kong is a leader for sustainable financing in the region.” Sharma was sole sustainability coordinator, joint mandated lead arranger and bookrunner, agent and security agent on the transaction.
Carmen Ng, Director of Sustainability, Langham Hospitality Group said: “This facility is another demonstration of how we are embedding sustainability into all aspects of our business and financing strategy. As our business grows and develops, sustainability is vital in the way we manage our properties and key stakeholder relationships. We continue to pursue high standards of ethical behaviour and establish excellence in environmental responsibility as we continue to expand the number of hotels and elevate the Langham and Cordis brands.”
The Cordis, Hong Kong
“Today the financial sector stands at a crossroads of change: Since the 2008 global financial crisis, the role of finance in building equitable, sustainable economies has been heavily scrutinised across societies.” Said Jessica Cheam, Managing Editor of Eco-Business. “Set amid this backdrop is the rise of sustainable finance, which allocates capital with an environmental, social and governance (ESG) lens to create long-term value. Despite the encouraging momentum however, the deployment of private capital for sustainable finance remains relatively small.” continued Cheam.
According to the Business and Sustainable Development Commission, sustainable development in Asia will require US$5 trillion of investments to address complex challenges of climate change, growing inequality and rising urbanisation by 2030. These types of partnerships can aid the finance industry in accelerating the responsible deployment of capital for these innovators in a rapidly growing region.
Previously known as a positive-incentive loan (PIL), the sustainability-linked loan (SLL) is similar to other revolving credit facilities – a type of corporate loan – with the difference being the interest paid by the borrower. This interest is linked to selected sustainability key performance indicators (KPI), which can be, for example, carbon emissions or a more generic ESG target. Companies that achieve their sustainability targets benefit from favourable interest rates, while a failure to do so will lead to higher rates. With SLLs companies therefore have an incentive to align both financing and sustainability objectives.
The Langham, Hong Kong
Under the terms of the sustainability-linked loan, Langham Hospitality Investments will be eligible for reductions on interest rates when certain sustainability objectives have been met. The new sustainability-linked loan facility reflects Langham’s commitment to create a positive change for the environment, but furthermore, to hold themselves financially accountable for their impact on the environment and society.
EarthCheck’s deep science and patented methodology and software platform was created for the world’s travel and tourism industry by the Australian Government’s Cooperative Research Centre for Sustainable Tourism (STCRC) over a 10-year period. The STCRC grew to be the largest dedicated tourism research organisation in the world. Today, EarthCheck continues its thirty-year journey to support the development of a dynamic, internationally competitive, and sustainable tourism industry. In consultation with a broad cross section of stakeholders, EarthCheck identifies opportunities and challenges that are likely to impact on the global tourism industry over the next five to ten years with a strong focus on scientific research, thought leadership and the development of tools and products to improve business practices and inform policy development.
