On April 15, 2021, General Mills, a leading global food company, announced that it had closed the first-ever sustainability-linked loan (SLL) facility for a US consumer packaged goods company.

The $2.7 billion five-year multi-currency revolving credit facility (RCF) was arranged by Bank of America (which acts as administrative agent) and syndicated to a significant number of banks and other lenders.

The RCF was filed with the US Securities and Exchange Commission and includes a matrix that will adjust the applicable interest rate and fees under the RCF based on General Mills’ reductions in its greenhouse gas emissions in owned operations (i.e., only Scope 1 and 2 emissions) and its use of renewable electricity for global operations.

Relatedly, the US Loan Syndications and Trading Association, together with the Loan Market Association (LMA) and the Asia Pacific Loan Market Association, released their Social Loan Principles earlier this month.

SLLs are more common in the European loan market, and on April 7, 2021, the LMA and the European Leveraged Finance Association (ELFA) published an insights report titled “Are ESG margin ratchets saving the planet, or saving borrowers money?” The report covers the current state of ESG-linked provisions in the European leveraged finance market and looks at how the industry can respond, the LMA and ELFA’s next steps, and how to get involved.

Based on our previous analyses of international loan market developments in green, social and sustainable finance (see our earlier Perspectives here, here and here) and the steadily increasing interest in SLLs from our clients—both borrowers and lenders—we expect to see steady growth of this product in the United States.

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