Wates takes out £90m sustainability-linked loan

Loyds Bank is Wates’ main lender

Wates’ three-year loan is believed to be the second largest ever taken out by a UK construction company with sustainability terms.

And one of those strings is that he needs to do something about his pale male leadership.

Sustainability Linked Loans are designed to keep businesses focused on their goals, providing a financial incentive for success. Under the terms, if Wates misses specified environmental and social goals, the interest rate increases.

Willmott Dixon took out a £50m sustainability loan in May 2021. In October 2021, it converted its £375m revolving credit facility into the industry’s largest sustainability loan. construction in the UK to date, extending the deadline to October 2024.

Like Balfour Beatty, Wates’ main lender is Lloyds Bank. HSBC and AIB also provided equal funding on the Wates deal of £30m each.

The first Wates must achieve is that 35% of its top 200 suppliers have Science Based Target Initiative (SBTi) approved targets in place by December 2024. This relates to the company’s Scope 3 emissions. . These currently account for around 98% of its greenhouse gas emissions.

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Wates’ second KPI is to create nearly £370m of “social value” over the next three years.

Finally, the company should aim for a more balanced representation as part of its existing inclusion and diversity strategy by improving the number of women in leadership positions. Wates currently has one of the most male – and all-white – management teams among major construction contractors. Its group board has 11 people – 10 white men (five called Wates) and one white woman (audit committee chair Sue Harris). The management team is also 90% male and 100% white, with Helen Bunch, managing director of Wates Residential, the only woman at the top.

Chief Financial Officer Philip Wainwright said: “We are continually reviewing how we can embed sustainability into what we do and are delighted to have been able to identify and agree three additional measures with our lenders that will deliver results. in terms of sustainability and to demonstrate our commitment to Scope 3, social value and diversity.

“We already have a close working relationship with Lloyds Banking Group through the Wates Innovation Network and it is encouraging not only to have the support of three banks, but also to see them preparing to increase their level of exposure, which is a true vote of confidence in our ability to achieve these KPIs.

Max Jones, relationship manager within Lloyds Bank’s construction and infrastructure team, said: “Now is not the time for built environment businesses to rest on their laurels when it’s about creating a greener and more welcoming industry. Wates has long been a sustainability leader in the industry – we look forward to helping them strengthen and grow that position. »

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