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UK’s largest housing association agrees £100m sustainable loan

Clarion Housing Group has secured a £100m loan with NatWest, the interest rate on which will depend on the association’s ability to meet environmental, social and governance (ESG) targets.

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@Clarion_Group has secured a £100m loan with NatWest, the interest rate on which will depend on the association’s ability to meet environmental, social and governance (ESG) targets #UKhousing

NatWest will assess Clarion against its ‘social key performance indicator’ (KPI), which will measure the social value in the group’s supply chain. The second KPI attached to the deal will measure the number of apprentices hired on Clarion construction sites.

If Clarion creates a set amount of social value and places an agreed number of apprentices, it will benefit from a lower interest rate margin on the loan.

The transaction follows two previous sustainability bonds issued by Clarion in January and November last year, worth a combined £650m.

Clarion, which owns and manages 125,000 homes, was one of the first backers of the social housing Sustainability Reporting Standard that launched last year and has separately produced its own ESG report for investors.


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The loan is also Clarion’s first facility linked to the Sterling Overnight Index Average (SONIA) interest benchmark, which will replace the London Interbank Offered Rate (LIBOR) at the end of this year.

SONIA is a method of calculating interest rates based on transactions from the previous day, whereas LIBOR is based on forward-looking projections made daily by experts.

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.”

Hedley Hadfield, director of housing finance at NatWest, said: “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 forms part of NatWest’s recent commitment to support the housing association sector with £3bn of new funding by the end of 2022.

Update at 16:40pm, 06.04.21:

This story was amended to clarify that Clarion has previously issued sustainability bonds, not “sustainability-linked” bonds as previously stated.

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