Hugo Boss gets major loan linked to sustainability targets

By

Sandra Halliday

Published
Nov 26, 2021

Hugo Boss has become the latest major fashion name to link its financing to green goals. The German giant — in which the UK's Frasers Group owns a large stake — has secured a revolving syndicated loan with a sustainability component.

This means that the interest rate for the €600 million loan is “linked to the fulfilment of clearly defined sustainability criteria”. It’s an approach increasingly being taken by fashion and retail businesses with that interest rate issue directly linking financial benefits to being green.

The syndicated loan from a selection of major banks was “considerably oversubscribed and aims at providing the company with additional financial flexibility to ensure the successful execution of its ‘CLAIM 5’ growth strategy”, we’re told. 

CFO Yves Müller said the “successful transaction reflects our lenders’ great confidence in our growth strategy.”

The loan is classified as sustainable finance and as such fulfils key ESG criteria. The interest rate will be adjusted annually based on the achievement of target values defined by the firm across four ESG areas: the reduction of CO2 emissions, the share of women in management positions, fair working conditions at suppliers, as well as the use of more sustainable cotton. 

It’s particularly significant because it’s the first financial instrument at the business to be linked to sustainability criteria, but it’s unlikely to be the last.

The loan has a term of three years and includes two options to extend by an extra year in each case, plus an option to increase the credit amount by up to €300 million. 

Hugo Boss said it “attaches high importance to the topic of sustainability”. In the years ahead, it will “further intensify its sustainability efforts to deliver both clear added value as well as emotional engagement with the consumer”.

This has helped it to appear in the Dow Jones Sustainability Index (DJSI) World for five years running.