DEME’s entire long-term loan portfolio is transformed into sustainability-linked loans

Publication Date

In order to achieve DEME’s ambitious sustainability goals in all aspects of its business, the Group has undertaken the complete transformation of its long-term loans portfolio and converted them all into sustainability-linked loans. This major commitment underlines DEME’s vision to realise a sustainable future and represents a total loan value of
EUR 579 million.

Crucially, the commercial terms of loans with the Group’s relationship banks will now be directly linked to the performance of DEME with regard to sustainability in two specific areas: work safety and low carbon fuel. Key performance indicators (KPIs) will trigger adjustments on the interest margins applied to the loans.

First in the industry
Geert Wouters, Head of Structured Finance and Treasury at DEME, comments: “The DEME Group is again a pioneer. We are proud to be the first company in our industry to introduce these important sustainability targets in all of our long-term financing agreements. In a strong signal to our stakeholders, we have demonstrated that we are considering our sustainability goals throughout our business, supporting this with concrete action. This is a bold step, and it shows that we are willing to accept the related financial consequences.”

Wim Eraly, Senior General Manager Corporate Banking and Facility Management at KBC Bank NV, complements: "KBC is proud to have been selected by DEME as sustainability coordinator to assist them with the incorporation of the sustainability features in their long-term bank financing. We build on our existing knowledge and experience to structure and coordinate this sustainability-linked financing, guiding DEME in the selection of the sustainability key performance indicators and the target setting ensuring material and challenging targets for DEME. The transaction clearly illustrates KBC’s expertise in advising its clients with sustainable finance solutions to support their transition to a greener future. "

10 banks worldwide
In accordance with the Sustainability Linked Loan Principles issued by the Loan Market Association, the transaction was realised on 7 February 2022, with KBC acting as the sole sustainability coordinator for DEME. Geert Wouters emphasises: “We have a longstanding partnership with KBC and we are delighted to have been able to work closely with them to ensure the success of this transition to sustainable financing, which has actually involved 10 banks worldwide, being ABN Amro Bank NV, Banco Bilbao Vizcaya Argentaria SA (Belgian Branch), Belfius Bank NV, BNP Paribas Fortis SA/NV, Crédit Agricole Corporate and Investment Bank (Belgium Branch), Commerzbank AG (Luxembourg Branch), DBS Bank Ltd (London Branch), ING Belgium NV/SA, KBC Bank NV and Coöperatieve Rabobank U.A.”.

By changing the existing loans into sustainability-linked loans, the lenders agree to lower the interest rate when the company achieves its targets in relation to the two sustainability KPIs. Failure to achieve both targets will result in a slight increase of the interest rate.

KPIs centred on work safety and low carbon fuels
The first Environmental, Social, and Corporate Governance (ESG) KPI relates to work safety – always the most important priority at DEME. Often performing groundbreaking projects in challenging and remote environments, this KPI requires the company to continually look to improve its safety performance. DEME has already introduced the necessary management systems and action plans to achieve its safety goals, but the company remains vigilant. Improving safety is never a closed chapter.

The second ESG KPI includes a target to increase the percentage of low carbon fuels consumed by the company. Again, this is a continual focus of the company and DEME has set ambitious targets to reduce emissions and to ultimately become climate-neutral by 2050. In the meantime, the company aims to reduce greenhouse gas emissions by 40% by 2030 relative to 2008 per unit of work.