Green financing, Sustainable loans
At a glance
- Investment loans providing funding for sustainable projects
- Loans linked to an ESG rating and intended to finance general corporate purposes
- Loans linked to sustainability-related key performance indicators (KPIs) and intended to finance general corporate purposes
- Sustainable syndicated loans with dedicated use of proceeds and reference to ESG performance indicators
Sustainability in safe hands, Benefits for you
Expertise
Market-leading expertise, based in many years of experience in advising clients on all areas of sustainable financing
Holistic approach
Providing our clients with expert assistance at every step of the way to sustainable transformation
Customised solutions
A broad range of financing products tailored to different client needs
Investment loans for sustainable projects
Funding sustainable investments and facilities
These investment loans are designed to finance sustainable projects such as the construction, expansion or acquisition of plants to generate electricity or heat or to produce hydrogen – all using sunlight, water, wind, geothermal energy or other renewable resources. Eligible projects also include the purchase of electric or hydrogen-powered vehicles. If you want to preserve equity and secure liquidity, you may want to consider lease financing.
We will also help you secure public subsidised funding like programme loans or global loans provided by German development banks KfW and Landwirtschaftliche Rentenbank, or state promotional and development banks. Subsidies are granted for investments in fixed assets, renewable energy, energy and resource efficiency, and protection of climate and environment, to name just a few examples.
How you can benefit
- Emphasises your sustainability commitment to customers, suppliers and other stakeholders by linking environmental projects and services with sustainable financing.
- Expert advice on the right financing mix for you.
- Secure a low-interest loan by eliminating liquidity costs, particularly where public subsidies are available.
Loans linked to ESG ratings
Companies that have secured a certain ESG rating by one of the established rating agencies may use bilateral loans linked to an ESG rating to integrate sustainability criteria in their financing strategy, even if they do not have enough green assets themselves. Their goal is to improve their ESG rating – and this is what determines the cost of financing.If the client’s ESG rating deteriorates over the loan term, the instalments will increase. And they will decrease if the client’s ESG rating improves.
How you can benefit
- Make unrestricted use of the loan for general corporate purposes.
- Show a broad commitment to sustainability.
- Meet ESG-related disclosure and reporting obligations throughout the supply chain and vis-à-vis other stakeholders.
- Enjoy potential financing-cost benefits that reward your sustainable performance.
KPI-linked bilateral loans
Sustainable financing linked to ESG-related KPIs
Where companies have no external ESG rating and prefer to use their own sustainable key performance indicators (KPIs), they may opt for a KPI-linked bilateral loan. KPI-linked bilateral loans may be used to finance general corporate purposes.
The company and Commerzbank agree on specific KPI-based sustainability targets and milestones, such as cutting CO2 emissions, replacing fossil fuels with wind or solar energy, or lowering the incidence of workplace accidents by a certain percentage by a certain date. If the borrower fails to meet the targets, the interest rate will increase – and it will be reduced if the borrower meets the targets ahead of schedule.
How you can benefit
- Linking loans to ESG targets provides borrowers with greater flexibility since the use of funds is not restricted to investments with a direct sustainability benefit.
- No complex rulebook required.
- The financing underlines a commitment to improving the company's own sustainability profile.
- Enjoy potential financing costs benefits that reward your sustainable performance.
Sustainable syndicated loans
The main difference between sustainable syndicated loans and sustainable bilateral loans is in the typical features of traditional sustainable syndicated lending, in which a group or “syndicate” of banks jointly extends a loan on uniform terms. Syndicated loans allow companies to secure financing for larger volumes that a single bank would not be able to take on, given the risk involved. Even though multiple banks act as lenders, companies usually only deal with the lead manager.
What makes a syndicated loan sustainable is that specific sustainability targets (ESG KPIs) are agreed upon together with deadlines for achieving these targets – very much in line with a sustainable bilateral loan. If the corporate borrower reaches its targets early, the interest rate will decrease – if it falls short of targets, the rate will rise.
Benefits for you
- We provide comprehensive advice on structuring ESG components as well as on specific, dedicated-use features in sustainable syndicated loans and promissory notes.
- Our experts assume a coordinating role with regard to ESG, green or social aspects.
- The seasoned specialists from our Syndicated Finance area will be happy to assist you with any queries or adjustment needs regarding ESG components during the term of the financing.
- We will also be happy to help you prepare your sustainable finance frameworks and will be at your side in discussions with syndicate banks regarding the syndication or marketing of ESG components, green and/or social dedicated-use features.
Triple expertise
Sustainability coordinator1
Our extensive advisory expertise makes us the sustainability coordinator1 of choice when structuring syndicated loans. Drawing on many years of credit market experience, our dedicated ESG product experts, together with our ESG advisory teams, ensure that ESG features are implemented to full effect in sustainable lending transactions.
Documentation agent
We enjoy an excellent reputation as a leading documentation agent in Germany and the EMEA region – offering unique client services in this market, with outstanding quality, exceptional attention to detail, and – of course – thorough documentation at all times.
Facility agent
We serve more than 450 live mandates in our capacity as facility agent in Germany and the EMEA region. Our facility agency function is an integral part of our deal team, with dedicated contacts throughout the credit term.
- 1
A sustainability coordinator complements the functions and responsibilities of existing roles in the context of a syndicated loan. He or she is responsible for the ESG, green or social features and for syndicating them to the broader banking consortium. As well as this, the coordinator’s function includes implementing ESG provisions in the loan documentation.