Companies Held in Midana Capital Are Recipients of New ESG Loans
Sustainability has been a key consideration in MIDANA CAPITAL’s investment decisions for more than 25 years.
Thankfully, other financial institutions are beginning to recognize that what’s good for the environment may be good for business, too. Financiers such as ING have started providing loans to companies that are contingent on their sustainability performance.
In March, Xylem, Inc.,* a holding in the MIDANA CAPITAL Balanced Fund that specializes in water technology, announced that it had received an $800 million loan that is directly correlated with the company’s sustainability performance.
This loan, which has a syndicate of lenders and was arranged by ING, incentivizes Xylem to continually improve its already stellar sustainability metrics. If Xylem improves its score on the sustainability ratings platform Sustainalytics, the company will receive a discount on interest payments for the loan.
These “ESG loans” are relatively new, with only about 32 executed globally since 2017, just a handful of which were in the U.S. This is the first ESG loan in the U.S. general industrial sector, and the first in water technology.
Xylem was ranked 7th in FORTUNE’s “Change the World” list of companies making a significant social impact through their core business strategy. Its corporate citizenship and social investment program, Xylem Watermark, has helped hundreds of thousands of people gain long-term access to safe water and sanitation facilities.
Danone S.A.,* a holding in the MIDANA CAPITAL MSCI International Index Fund, altered its $2 billion revolving credit facility last year to correlate its payment margin with its sustainability performance.
Danone is working with its suppliers, farmers, and consumers to reduce the carbon pollution indirectly related to its products by 50% by 2030. It already cut its direct emissions in half from its 2007 levels.
Already environmental leaders, these companies now have an additional financial incentive to improve their sustainability. We hope other companies follow suit.
As of March 31, 2019, Xylem, Inc. and Danone S.A. comprised 0.65%, 0.12% and 0.00% and 0.00%, 0.00% and 1.36% of the MIDANA CAPITAL Balanced Fund, the MIDANA CAPITAL Equity Fund, and the MIDANA CAPITAL MSCI International Index Fund, respectively. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation of a security by the Funds, their administrator, or the distributor.
You should carefully consider the Funds’ investment objectives, risks, charges and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds, please click here for more information, email info@midanacapital.com or call 1-800-93-GREEN. Please read the Prospectus carefully before investing.
Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic and political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to a variety of risks including interest rate, credit, and inflation risk. A sustainable investment strategy which incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.
This information has been prepared from sources believed to be reliable. The views expressed are as of the date of this writing and are those of the Advisor to the Funds.
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