Investment Banks with a sustainable/green focus?

Greentech Capital Advisors has a pretty good reputation for green-focused banking. I know two people who work / worked there and both seemed to really enjoy it. You should not need a super technical background to get in, both of my contacts majored in finance. I'm not sure on difficulty of breaking in, but I would assume that you have to be able to convey a good, coherent reason as to why you would like to focus on the space. I unfortunately do not have any insight into their actual recruiting process, though.

Barclays has a relatively new group in this space -- launched sometime in 2019 I believe.

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If you're more interested in field than function, check out the NY Green Bank & the CT one (NY>>CT). They do some neat stuff

THE RISE OF SUSTAINABILITY LINKED LOANS

BY TESS VIRMANI, ASSOCIATE GENERAL COUNSEL & EXECUTIVE VICE PRESIDENT, PUBLIC POLICY

ESG and sustainability are two buzzwords that crop up more and more in the financial markets – the loan market included. According to Refinitiv LPC, $167 billion in green loans and sustainability linked loans came to the global loan market in 2019. Of that activity, more than $135 billion in volume represents sustainability linked loans. A sustainability linked loan (SLL) economically incentivizes the borrower, typically through a margin ratchet, to achieve ambitious, predetermined sustainability performance targets (SPTs). The loans are not pure green financings – like green loans – but they are an important form of specialized financing to help companies make the transition to more sustainable business models. In this way they stand apart as a transition tool and an SLL could be made to any company that has a sustainability plan and it will reward that company for achieving the goals set out in that plan.

The broad applicability means that the industries from which SLL borrowers hail could run a wide gamut, but several sectors jump out as particularly likely candidates. Both the energy/utilities sector and REITs benefit from the fact that potential metrics in these spaces are straightforward and readily accessible (e.g. amount of green-certified square footage, GWhs of renewable energy production) which allow them to quickly and easily provide a basis on which sustainability can be assessed. The Industrials sector is another likely candidate where a company may look at its waste stream or perhaps renewably sourced inputs for the production of its product. Interestingly, financial services could be another industry that sees SLLs if a particular fund or user of financing has ESG investment strategies in its portfolio which may then serve as a metric. At its heart, an SLL is simply a loan that ties economic incentive to sustainability performance. But what further categorizes this type of loan? To promote the integrity of this then-fledgling product, the LSTA, together with the LMA and APLMA, published the Sustainability Linked Loan Principles (SLLP) in March 2019.1 Like the Green Loan Principles2 first published by the loan trade associations, the SLLP set forth a voluntary, high-level framework for SLLs to enable market participants to clearly identify and understand an SLL’s key characteristics based on four core components, described briefly below: 1. Relationship of the selected SPTs to the borrower’s overall CSR or sustainability strategy:

The borrower should clearly communicate its sustainability objectives to its lenders and how these objectives align with the sustainability performance targets (SPTs) proposed for use in the loan.

2. Target setting–measuring the sustainability of the borrower:

The SPTs selected for each transaction are tied to improvement in relation to predetermined performance metrics. For instance, a sustainability linked loan may be tied to a borrower’s preselected internal key performance indicators or tied to its external ESG rating. The most critical component with respect to the selection of the sustainability metrics and setting of the SPTs is that they are meaningful to the borrower’s business and set at an ambitious target level. Typically, borrowers are best placed to determine that a chosen metric is meaningful—meaning core to the borrower’s business —and a target is ambitious—meaning represents a reach and true transition. However, lenders do also play a role and will question the chosen metrics and SPTs to ensure that they are reasonable. One of the arrangers may even serve as the sustainability coordinator and help facilitate this dialogue between the borrower and the lender group. In some circumstances, it may be helpful to engage an external reviewer to determine if targets are ambitious for the borrower and that borrower’s industry. This is just one of the way in which a third party may provide an external review (see below).

3. Reporting on the borrower’s performance with respect to the relevant SPTs:

The SLLP encourage the borrower to make and keep readily available up to date information relating to its SPTs and this information should be reported to the lender group at least on an annual basis.

4. The need for external review is negotiated on a deal-by-deal basis:

For each transaction the need for external review is to be negotiated and agreed between the borrower and lenders. For loans where information relating to the SPTs is not made publicly available or otherwise accompanied by an audit/assurance statement, it is strongly recommended that a borrower seek external review of its performance against its SPTs. Separately, a company may seek an external ESG rating which then serves as the relevant metric in the SLL. We can readily see why borrowers are attracted to SLLs – the borrower enjoys lower borrowing costs while clearly demonstrating its commitment to sustainability in its core business. But, what is in it for the lenders? Quite a lot. First, SLLs are one way of serving customers on their transition path and that is why we have seen relationship banks participating in this space. Second, by paying special attention to the economic cost of environmental change, there may be a better credit story for that borrower which then merits the discount in pricing. Third, banks just like corporates and nonbank investors are focusing on how they can promote ESG in finance and participation in SLLs can be a useful communication of that effort. Finally, it is premature for the US market, but capital relief is being considered in Europe, and may be possible in the future in the U.S. The next article in this publication

Xylem - Sustainable RC below

Item 1.01. Entry into a Material Definitive Agreement On March 5, 2019, Xylem Inc. (the “Company”), as borrower, entered into a Five- Year Revolving Credit Facility Agreement (the “2019 Credit Agreement”), a senior unsecured revolving credit facility, in an aggregate principal amount of up to $800,000,000 (available in U.S. dollars and in Euros), with a syndicate of lenders arranged by Citibank, N.A., BNP Paribas Securities Corp., ING Bank N.V., Dublin Branch, JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, as Lead Arrangers and Joint Bookrunners, and with Citibank, N.A., as Administrative Agent, JPMorgan Chase Bank, N.A, as Syndication Agent, ING Capital LLC, as Sustainability Coordinator, and BNP Paribas and Wells Fargo Bank, National Association, as Documentation Agents. The 2019 Credit Agreement provides for increases of up to $200,000,000 for a maximum aggregate principal amount of $1,000,000,000 at the request of the Company and with the consent of the institutions providing such increased commitments. The facility made available by the 2019 Credit Agreement will be used for working capital and other general corporate purposes. Interest on all loans under the 2019 Credit Agreement is payable either quarterly or at the expiration of any LIBOR or EURIBOR interest period applicable thereto. Borrowings accrue interest at a rate equal to, at the Company’s election, a base rate or an adjusted LIBOR or EURIBOR rate plus an applicable margin. The 2019 Credit Agreement includes a pricing grid that determines the applicable margin based on the Company's credit rating, with a further adjustment depending on the Company’s annual Sustainalytics Environmental, Social and Governance score. The Company will also pay quarterly fees to each lender for such lender’s commitment to lend accruing on such commitment at a rate based on the credit rating of the Company, whether such commitment is used or unused, as well as a quarterly letter of credit fee accruing on the letter of credit exposure of such lender during the preceding quarter at a rate based on the credit rating of the Company (as adjusted for the Environmental, Social and Governance score). The 2019 Credit Agreement requires the Company to maintain a consolidated total debt to consolidated EBITDA ratio, which will be based on the last four fiscal quarters. The 2019 Credit Agreement also contains a number of customary covenants, including limitations on the incurrence of secured debt and debt of subsidiaries, liens, sale and lease- back transactions, mergers, consolidations, liquidations, dissolutions and sales of assets. The 2019 Credit Agreement also contains customary events of default. The Company has the ability to designate subsidiaries that can borrow under the 2019 Credit Agreement, subject to certain requirements and conditions set forth in the 2019 Credit Agreement. No borrowings are outstanding under the 2019 Credit Agreement on the date hereof. The foregoing summary is qualified in its entirety by reference to the 2019 Credit Agreement, a copy of which is attached hereto as Exhibit 10.34 and is incorporated herein by this reference.

Xylem Credit agreement cover page Sustainability Agent: ING

Allocations - banks that lend / committed to Sustainable RC