Guess announces 250 million euro sustainability-linked credit facility

US retailer Guess is the latest fashion company to announce a credit facility directly linked to its success in hitting agreed sustainability targets.

The 250 million euro European credit facility will focus on three key pillars: ‘Operating with Integrity’, ‘Empowering our People’, and ‘Protecting the Environment’.

The interest rate of the facility will be subject to an annual adjustment based on sustainability goals aimed at reducing greenhouse gas emissions, increasing the use of sustainably sourced materials, and increasing the penetration of the company’s ‘Guess ECO’ products.

Unlike green bonds, where funds are linked to specific projects, sustainability-linked bonds are coupled to a company’s performance in meeting several defined sustainability targets.

Environmentally-linked credit facilities have become increasingly popular in recent years as pressure mounts from investors and consumers alike for companies to prove they are serious about their sustainability strategies.

Guess CEO Carlos Alberini said the facility “reflects the importance of the European region to our overall company as our largest segment, as well as our lenders’ confidence in our strategy”.

He added: “We remain highly committed to our goal of protecting the environment and see sustainability as fully integrated into our operations.”

Guess has entered into the revolving credit facility through its wholly-owned Swiss subsidiary, Guess Europe Sagl.

The facility has an initial term of five years with an option to extend the maturity date by up to two years and expand the facility by up to 100 million euros.

The facility replaces short-term borrowing arrangements Guess had with various banks totaling 120 million euros.