BMO Financial Group, acting as a sustainability structuring lead, financed a deal with Gibson Energy, a North American energy company. The deal amended an existing credit facility and introduced a margin adjustment incentive mechanism tied to Gibson’s commitment to reduce carbon emissions and increase the representation of women as well as racial and ethnic minority representation in its workforce and on its board. In this financing, a part of Gibson’s borrowing costs will depend on whether it achieves pre-determined sustainability targets.
“As part of our efforts to embed the principles of sustainability and ESG into all aspects of our business, we are very pleased to be first amongst not only our Canadian midstream energy infrastructure peers, but also all public energy companies in North America, to fully transition our principal credit facility to a sustainability-linked credit facility,” Sean Brown, senior vice president and CFO of Gibson Energy, said. “This is further evidence of our commitment to reaching our sustainability and ESG targets, as key targets from each of the three pillars of ESG will now also directly impact our financing costs.”
“Deals like this one with Gibson Energy are aligned to the way BMO works with clients across industries, including the energy sector, to help them further their transition to a greener economy, proving we can both serve the needs of our clients and work toward a more sustainable future,” Jonathan Hackett, head of sustainable finance at BMO, said. “Our experience in the energy sector, combined with our expertise in sustainable finance, positions us as the ideal lead partner in helping Gibson Energy reach its environmental and social sustainability goals.”
The new sustainability-linked, five-year, $750 million revolving credit facility includes terms that reduce or increase the borrowing costs as sustainability and ESG targets are met or missed. The performance determinants are split between three pillars.
- Environmental: The reduction of scope 1 and scope 2 greenhouse gas emissions intensity by 15% by 2025
- Social: Increasing the representation of women in the workforce to 40% to 42% as well as increasing racial and ethnic minority representation in the workforce to 21% to 23% by 2025
- Governance: Increasing the representation of women on the board to at least 40% and electing at least one member of a racial or ethnic minority group to the board by 2025.