CEMEX has secured the Sustainability-linked loan of the year award for its $3.25 billion deal. The structure is based on CEMEX's Sustainability Linked Financing Framework, the first in the sector to use three key performance indicators (KPIs).
The Monterrey-based construction materials company's loan included a pricing mechanism that incentivises performance against three climate action KPIs:
- Net carbon dioxide emissions per tonne of cementitious product;
- Power consumption from clean energy sources in cement; and
- Alternative fuels rate.
The loan is aligned with a "well-below 2°C" scenario, as judged by the Science-Based Targets initiative, which Ana Carolina Oliveira, ING's head of sustainable finance covering the Americas region, said was "the most ambitious scenario" available for the cement industry to date.
ING was heavily involved in the structuring of the framework, and acted as the sole sustainability structuring agent of the Sustainability-Linked loan. Sustainalytics provided a second-party opinion.
Oliveira noted that the cement industry is currently carbon intensive, so being awarded the Sustainability-linked loan of the year is a testament to the ambitiousness and strength of the KPIs and annual targets.
She added: 'We are seeing a convergence when it comes to bond and loan frameworks. The reason is simple: companies are committing to improving their sustainability performances, and that translates into comprehensive frameworks that are product agnostic. The decision to issue a bond or a loan comes as a second thought'
"This year, I think sustainability-linked or green loans will have a stronger year than bonds due to the market volatility."