Environmental sustainability programs now have monetary value with banks.
Consider CMS Energy, one of the nation’s largest combination electric and natural gas utilities.
In June 2018, the Michigan-based energy provider became the first U.S. company to access new funding opportunities available to businesses that implement a well-designed sustainability program.
CMS and its primary subsidiary, Consumers Energy, obtained $1.4 billion in new credit facilities. Under the loan terms, the company can reduce its interest rate by meeting targets related to environmental sustainability, specifically renewable energy generation.
Linked to clean energy goals, CMS Energy’s revolving loan is one of a growing number of innovative credit facilities that provide capital to organizations that meet “green” requirements.
And that includes food and agricultural businesses.
“Many of our clients are surprised to learn of the exclusive funding opportunities that open up to them once they implement a sustainability program,” says K·Coe Isom’s Matt Armstrong, an expert in ag sustainability programs.
Numerous sustainability financing programs are available to food and ag businesses, beyond the Conservation Reserve Program funds available to farmers, Armstrong points out. These include:
- Loans with variable interest rates
- Low interest-rate credit lines
- “Green” bonds
- Specialized grants
“K·Coe Isom can directly help our clients operate sustainably and engage with banks to access these incentives,” Armstrong says.
The emerging and innovative “green” credit facilities move businesses into an era “where sustainability and financial results go hand in hand,” CMS Energy President and CEO Patti Poppe said in announcing the financing transaction. The energy company worked with Barclays, the sole Sustainability Structuring Agent. Barclays partnered with four other banks to syndicate the loan. Earlier this year, CMS Energy declared that, by 2040, it plans to use zero coal to generate electricity, reduce carbon emissions by 80 percent and meet a renewable energy goal of more than 40 percent.
To explore sustainability-linked financing opportunities for your business, contact Matt Armstrong at Matt.Armstrong@kcoe.com.