Etihad Airways, the national airline of the UAE, has raised $1.2 billion in global aviation’s first sustainability loan linked (SLL) to environmental, social and governance goals (ESG).
The deal is Etihad Airways’ third sustainable financing transaction as it pledged last year to reach net-zero carbon emissions by 2050. The transaction is also the largest sustainable financing in the airline’s history and follows the two innovative aviation financing deals, a first-of-a-kind sustainability-linked transition sukuk in 2020 and a loan tied to the UN Sustainable Development Goals in 2019.
The COVID-19 pandemic has increased global concerns about climate change threats, with governments promising to build back greener and borrowers establishing ESG frameworks as part of that transition. Last week, airlines around the world reinforced their climate goals and committed to net-zero carbon emissions by 2050 as they face increasing pressure from environmental activists and politicians.
“Etihad Airways has spearheaded sustainable financing in aviation, and we are proud to continue our innovative track record by being the first airline to secure a sustainability-linked ESG loan. Financing our operations in a way that supports both our planet and the people in our local communities is the natural next step of our financing strategy. Our goals will have a real-world impact, and to underscore our accountability, we have committed to penalties and incentives of up to $5.5 million linked to our progress against key performance indicators. Through our Greenliner program, we are pursuing multiple sustainability-related initiatives at Etihad Airways to improve the environmental footprint of aviation, and green financing is a key part of our strategy.”
Etihad Airways has selected HSBC and First Abu Dhabi Bank (FAB) as the strategic partners and financiers for this transaction. The two acted as Joint ESG Structuring Banks, Joint ESG Coordinators, Joint Bookrunner and Mandated Lead Arranger. FAB also acted as Facility Agent.
“HSBC is committed to helping lead the transition to a net-zero carbon economy and we’re mobilizing finance and accelerating innovation to make this happen, working in partnership with our customers to realize the opportunity to build a more sustainable, resilient, and prosperous future,” Mr. Abdulfattah Sharaf, CEO, HSBC UAE & Head of International Markets, said.
Commenting on the bank’s involvement, Mr. Martin Tricaud, Group Head of Investment Banking of FAB, said, “As a strategic partner and financier to Etihad in this transaction, FAB has demonstrated its sustainable financing expertise and contributed to the transition towards sustainability across the aviation sector.”