With a new $410 million ESG loan, British fashion house Burberry says it will be climate positive by 2040.
Furthering its commitments to thwart climate change, luxury fashion label Burberry says it has received a sustainability-linked loan valued at £300 million from Lloyds Bank. The funding will support its efforts across environmental, social, and governance (ESG) targets.
“Linking sources of funding to sustainable initiatives will help drive this, not only in the luxury industry but also across the wider economy,” Julie Brown, chief operating and financial officer at Burberry, said in a statement.
According to Brown, the company sees net zero as a priority in its long-term success. Burberry is considered a leader in sustainable fashion. The Dow Jones Sustainability Index ranked Burberry as a top brand leading the way as a sustainable luxury brand.
Burberry’s sustainability commitments include efforts to reduce emissions by an additional 46 percent by 2030 before hitting its 2040 target of being net-zero—and ten years ahead of Paris Agreement targets.
In 2020, Burberry issued a sustainability bond with help from investors to finance sustainability projects including LEED certifications or BREEAM1 certifications for some of its facilities. That bond also helped the label improve on its sourcing by shifting to more sustainable options, and reduce pollution from packaging.
“Helping our clients reach net zero is a key priority for us,” Scott Barton, managing director of Lloyds Bank’s Corporate and Institutional Coverage team, said in a statement. “Working alongside a climate leader such as Burberry as it progresses its green journey will be crucial for helping the wider luxury fashion industry meet its ambitious goals.”
Italian fashion house Prada has also received sustainability-linked loans; it was the first luxury fashion brand to secure an ESG loan. Last February the luxury label signed a €50 million, five-year loan. Rates are adjusted if it meets certain criteria, such as achieving LEED status for a set number of stores, if employees meet a set number of training or hours, and if it meets targets for its sustainable Re-Nylon material.
According to recent data from BloombergNEF, found that the market for sustainable loans and bonds grew four-fold in 2021, hitting a value of more than $530 billion.
Late last year, Burberry announced it was entering the resale market in a partnership with UK resale platform My Wardrobe HQ. It will work with the platform on the selections, including pieces from VIP clients, the label said.
It also pledged to increase its after-care offerings to help customers retain products for as long as possible.
Pam Batty, Burberry VP of corporate responsibility, told Vogue Business, that its efforts include “expanding reuse, repair, donation and recycling routes and developing new partnerships and revaluation solutions.”
Burberry was also the first luxury brand to join the LEAF Coalition, a $1 billion initiative aimed at protecting tropical and sub-tropical forests by reducing deforestation. LEAF, which stands for Lowering Emissions by Accelerating Forest Finance, works across private and government sectors to fund its projects. Participating brands include Amazon, Airbnb, Bayer, and Unilever, among others.