Larsen & Toubro Secures $107 Million Sustainability-Linked Loan from Sumitomo
Loan facility offers lower interest rates on meeting sustainability targets
The company said the loan underscores its continued commitment to environmental, social, and governance (ESG) goals.
The facility offers lower interest rates linked to achieving two of L&T’s predetermined sustainability targets – the reduction of greenhouse gas emission intensity and water consumption intensity against the target levels.
R Shankar Raman, Group CFO and Whole Time Director of the company, said, “L&T continues to focus on achieving water neutrality by 2035 and carbon neutrality by 2040. Our long-term strategic plan also clearly outlines the ESG roadmap towards this goal.”
The company said these targets had been selected on the basis that they are relevant and material to the company’s overarching sustainability position and strategy.
The loan fulfilled the core requirements under the Sustainability Linked Loan Principles.
International Finance Cooperation (IFC) defines sustainability-linked finance as a facility designed to incentivize the borrower’s achievement of environmental, social, or governance targets through pricing incentives.
Toshitake Funaki, CEO of SMBC India, said, “This transaction supports SMBC Group’s initiatives to contribute to a sustainable society through its financial services. We are delighted to be the Sustainability Coordinator and Lender for this SLL facility to our core client, L&T”.
In August, L&T announced the commissioning of a green hydrogen facility at its AM Naik Heavy Engineering Complex in Hazira, Gujarat. The production facility is expected to produce 45 kg of green hydrogen daily, which would be used for captive consumption at its Hazira manufacturing complex.
Earlier in the year, the company, through its power transmission and distribution business, bagged orders to construct a 245 MW solar power project in Rajasthan and a 35 MW solar with a 57 MWh battery energy storage system in the Kutch district of Gujarat.
The company also won orders for the supply and construction of shunt reactors in 132 kV substations on a turnkey basis which will be added to Dubai’s electricity infrastructure.