Finance & Investment Organizational Governance

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AB InBev, Carlyle Ante Up on ESG Commitments

Two first-of-their-kind revolving credit facilities support Carlyle’s goal of 30% diverse board directors across its portfolio companies and progress toward four of AB InBev’s 2025 sustainability goals, respectively.

Published 3 years ago | About a 4 minute read

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Carlyle’s US$4.1B ESG-linked credit facility is first-ever exclusively tied to board diversity

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Global investment firm The Carlyle Group has secured the largest ESG-linked private equity credit facility in the US for $4.1 billion and the first to focus exclusively on advancing board diversity. Carlyle structured this revolving credit facility for its Americas corporate private equity funds, with the price of debt directly tied to the firm’s previously set goal of having 30 percent diverse directors on the boards of Carlyle-controlled companies within two years of ownership. Carlyle’s own board falls just short of that 30 percent goal.

Carlyle says it will continue its efforts to work closely with portfolio companies to achieve its 30 percent board diversity goal, with measurable KPIs.

Over the past three years, Carlyle’s research has shown that the average earnings growth of its portfolio companies with two or more diverse board members has been approximately 12 percent greater per year than companies that lack diversity, underscoring the correlation of board diversity with strong financial decisions and performance.

“In today’s accelerating world, we are improving outcomes with an innovative financing vehicle for our corporate private equity funds that directly supports the firm’s ongoing commitment to increasing board diversity as part of our integrated approach to building better businesses,” said Carlyle CEO Kewsong Lee. “As one of the world’s leading global investment firms, we have a significant opportunity to drive both growth and impact in an aligned way as we create long-term value for our companies, investors, shareholders and communities.”

The RCF is led by Bank of America and backed by a consortium of leading global financial institutions.

“Carlyle has long held the belief that diverse perspectives lead to great investment decisions, and this facility marks a tremendous milestone in our strategy to find opportunities at the intersection of financial performance and impact,” said Kara Helander, Carlyle’s Chief Diversity, Equity and Inclusion Officer. “We’re excited about the opportunity ahead to incorporate this facility into our multi-faceted approach to drive better results across our spheres of influence.”

US$10.1B sustainability-linked revolving credit facility to help AB InBev advance progress on 2025 goals

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Meanwhile, Anheuser-Busch InBev recently announced the successful signing of a US$10.1 billion Sustainability-Linked Loan Revolving Credit Facility (“SLL RCF”), which replaces its existing $9 billion revolving credit facility.

According to Bloomberg NEF, the milestone-setting facility is the largest SLL RCF in history and the first syndicated facility of its kind among publicly listed companies in the alcohol beverage sector. The five-year facility incorporates a pricing mechanism that incentivizes improvement in the following four key performance areas, which are aligned with and contribute to the company’s 2025 Sustainability Goals:

Further improving water efficiency in its breweries globally, supporting its water stewardship goal;
Increasing recycled PET content in PET primary packaging, contributing to its circular packaging goal;
Sourcing purchased electricity from renewable sources — toward its RE100 commitment to secure 100 percent of its purchased electricity from renewable sources by 2025; and
Reducing GHG emissions as a part of its science-based climate-action goal.

The above goals form part of the criteria influencing the margin of the SLL RCF, which demonstrates that sustainable business is good business. Embedding sustainability into AB InBev’s financing strategy strengthens internal and external alignment to the company’s Better World agenda.

“We are excited by the further integration of sustainable finance principles into the capital markets, and welcome the opportunity to embed these practices deeper into both our finance organization and the broader company,” said CEO Fernando Tennenbaum. “Our business is closely tied to the natural environment, and it is imperative that we continue to strengthen our leadership in addressing the increasing threats of climate change. Our business and our communities depend on it.”

The SLL RCF is provided by a consortium of 26 leading global financial institutions, with ING and Santander acting as Joint Sustainability Coordinators.

“This major sustainability-linked loan is an important milestone for both AB InBev and the beverage sector as a whole,” said ING CEO Steven van Rijswijk. “AB InBev has demonstrated a clear ambition level by incorporating a broad set of material sustainability targets into this core lending facility. I'm proud that ING is supporting AB InBev toward their goals with this sustainable financing structure, and at the same time implementing our strategy to help our clients to address climate risks and steer towards a circular economy.”