In today's corporate world, regardless of the type of industry, there's a greater recognition of the fact that every business impacts society in some way. Society, in general, has a keen eye on the future, and within that lies lots of hope. Customers have a strong impact on whether corporations will be successful over the long run. Successful corporations must also be forward-thinking. The relationship between companies and society suggests a trend in the direction of sustainability for the future. Corporations that make a commitment to being sustainable will need to be innovative and socially responsible to be successful. Individuals, companies and society will benefit from setting and achieving sustainability goals for organizations. Another benefit of the sustainability trend is that we all benefit from the reduction of waste within the environment.
One of the most recent examples of how to integrate sustainability measures into a corporate strategy is Prada S.p.A. The company has set the bar for other luxury brands and corporations in all industries.
Prada Sets a High Bar for Achieving Innovation in Sustainability
Prada S.p.A. closed the deal on a 'Ǩ50 million sustainability loan with Cr?'dit Agricole Group with a term of five years. Other companies have taken their shot at integrating sustainability into their strategies, but this is the first deal of its kind in the luxury products industry. Both Prada and the lender identified artisanship, energy savings and circularity as their main priorities in the transaction. Prada selected three objectives from an agreed-upon list. To live up to its part of the arrangement, Prada will need to achieve certain sustainability targets. In exchange, Cr?'dit Agricole Group will decrease the interest rates on the loan. The criteria for reduced interest rates include:- Obtaining LEED Gold or Platinum certification for a certain number of its stores.
- Meeting a set number of training hours for its employees.
- Meeting targets for using a material called Re-Nylon, a sustainable nylon substitute for the production of goods.
The Growth of Sustainability-Linked Loans
According to data from Environmental Finance, Cr?'dit Agricole is a visible contender in the sustainability-linked, or green-lending, market. This innovative market rocketed from just $5 billion in 2017 to a respectable $40 billion in 2018. The two companies share a bit of history together. Cr?'dit Agricole financed Prada's Hong Kong IPO in 2011. Cr?'dit Agricole also closed lending deals for sustainability-linked loans with Enel, a natural gas distribution company, and Swire Properties in Hong Kong. Mario Ortelli, managing partner of the luxury advisory firm Ortelli & Co., believes that now that luxury companies and their consumers have increased their awareness of sustainability, a lot of other companies will be motivated to seek out sustainability-linked loans. Certain industries, such as oil, gas and mining, where risks are greater, may make greater moves toward sustainability-linked loans. Ortelli notes that any company in the luxury market can seek and obtain green loans, as the operational models are essentially the same.Sustainability Initiatives Popular in the Fashion Industry
Prada also signed onto the Fashion Pact at the 2019 G7 Summit in France, along with 21 other brands. The fashion companies made a pact to meet the following three key sustainability goals:- Eliminate greenhouse gas emissions by 2050.
- Reduce single-use plastics by 2030.
- Support innovation to destroy micro-fiber pollution.
Media Highlights
Environmental, social and governance (ESG) issues have become more complex and multifaceted than ever before. At the same time, ESG continues to ascend on board and leadership agendas.
In this buyer’s guide, we explore what a market-leading ESG solution should look like and highlight the key areas organisations should be prioritising as they embark on their search.