The sustainability linked structure is based on the social value that Clarion creates with its supply chain.
The UK’s largest provider of affordable housing, Clarion Housing Group, announced it has recently secured a new £100 million credit facility provided by NatWest. The facility is structured as a sustainability-linked loan (SLL) where the margin is linked to Clarion achieving certain Social Key Performance Indicators (Social KPI). The facility is also Clarion’s first SONIA linked facility.
The first Social KPI measured is the Social Value that the supply chain of Clarion generates over and above contractual obligations to improve the economic, environmental and social wellbeing of Clarion communities, through in-kind or financial contributions. The second Social KPI measures the number of apprentices that will be hired on Clarion’s construction sites. The success of the metric is measured during the immediate preceding financial year. Clarion will benefit from a lower interest rate margin on the loan, if it creates a set amount of Social Value and places an agreed number of apprentices.
The Social Value and apprenticeship programmes are run by Clarion’s charitable foundation, Clarion Futures. Clarion believes being a good social landlord is about more than building and maintaining homes. Clarion Futures offers professional help when times are challenging and the opportunity to develop new skills and connections all year round. Every year it supports thousands of people into work, helps people manage their money, improve their digital skills and empowers people to develop relationships in the community.
The SLL will be used to help fund Clarion’s delivery of much-needed new homes.
Patrick Minjauw, Interim Director of Treasury and Corporate Finance at Clarion, said: “We can maximise the amount of social value we deliver and help communities to really thrive by working with our partners. Our Social Value programme mobilises our suppliers to help us realise our social objectives. We are delighted that banks such as NatWest are recognising the impact of this programme and provide funding at a lower interest rate. We will reinvest the savings back into providing much-needed new affordable homes and improving the lives of our residents.”
Hedley Hadfield, Director, Housing Finance at NatWest, said: “NatWest is delighted to have been able to support Clarion Housing Group with the provision of £100m of new funding. We want our customers and wider communities to succeed, increasing social housing so that more people can have an affordable and safe place to call home is a key part of that.
“Providing a sustainability linked loan is an excellent way for the bank to help Clarion with its priority of supporting the communities it works with. Having two separate KPIs is something we are starting to see more of in the social housing sector, ensuring that any benefits we can pass on to borrowers are maximised.”
The funding for Clarion Housing Group forms part of NatWest’s recent commitment to support the housing association sector with £3 billion of new funding by the end of 2022.