Promoting Measures to Address Climate Change from a Financial Perspective
SCREEN Holdings Co., Ltd. has finalized an agreement to receive a sustainability linked loan (as of March 16, facilitator: MUFG Bank, Ltd.), making it the first corporation in the Kyoto region of Japan to utilize this type of syndicated term loan. Sustainability linked loans are financial products specifically designed for businesses that are pursuing ambitious environmental goals, especially in relation to addressing climate change issues. Such loans link borrowing conditions such as interest rates with performance evaluations of the borrower’s sustainability initiatives.
SCREEN has previously formulated “Sustainable Value 2030,” a long-term guideline created to help improve its corporate social value over the next decade, and is currently working on a wide range of issues. One of its core environmental goals is the reduction of CO2 emissions, which has seen it launch a number of challenging projects. This includes the acquisition of certification under international climate change initiative Science Based Targets (SBT).*
The company has also recently embarked on “Value Up 2023,” a medium-term management plan for the 2021/03 to 2024/03 fiscal periods that it has developed by backcasting from its 10-year management vision. Value Up 2023 is likewise intended to help the wider SCREEN Group achieve a more sustainable management style and it incorporates a variety of practical measures developed in response to climate change.
Specific environmental goals SCREEN will target under its new loan agreement include a 10% reduction in CO2 emissions at its business facilities compared to fiscal 2019/03 to be achieved by the end of fiscal 2024/03. This effort will also form part of its sustainability activities geared toward the SBT initiative.
A key feature of the loan agreement is that it sets sustainability performance targets (SPTs) linked to environmental goals and the achievement of these targets is in turn tied to the receipt of favorable interest rates. This is expected to significantly increase the company’s motivation to satisfy the SPTs.
In addition, SCREEN will utilize the funds raised from the loan to increase the energy efficiency of its manufacturing facilities and to improve the ratio of electricity supplied by renewable energy sources. It also plans to pursue the development of new products based on environmentally friendly designs.
As evidenced by its new loan agreement, SCREEN remains firmly committed to the creation of a sustainable society. The company intends to continue its important contribution going forward.
Key Details of Loan
Contract date March 16, 2021
Period Three years
Amount 10 billion yen
Application Business funds
Lenders MUFG Bank, Resona Bank, Bank of Kyoto, Shiga Bank, Development Bank of Japan, Mizuho Bank, Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank
A third-party opinion regarding the compliance of this loan with the Sustainability Linked Loan Principles established by the Loan Market Association (LMA) and the rationality of its associated goals has been obtained from the Japan Credit Rating Agency (JCR).
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