Prada Signs New Loan Linked to Sustainability Targets
MILAN — Prada SpA has signed a new sustainability-linked, five-year loan with UniCredit banking group for a total of 90 million euros.
The loan is linked to key performance indicators: the regeneration and reconversion of production waste and Prada’s ability to increase the share of self-produced energy.
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“Sustainability, as a value, is now universally recognized and shared, also by the financial industry,” said Prada’s chief financial officer Alessandra Cozzani. “For us and for all companies, this results in an important stimulus to achieve increasingly ambitious goals toward a sustainable economy. We are proud to be among the first players in the luxury sector to have embarked on this path and to be considered a reference counterpart in the field today.”
The latest loan includes a bonus mechanism that allows for a reduction in the interest rate upon the achievement of quantitative targets in the field of environmental sustainability. The attainment of these targets will be certified on an annual basis by an independent third party.
Prada has invested in reducing production waste in clothing, leather goods and footwear and it is now committed to transferring these waste materials to third parties for their introduction into other production cycles, either through their regeneration or conversion into fertilizers or energy.
Also, Prada has invested in the construction of photovoltaic systems in the group’s industrial and corporate sites. This is continuing in order to ensure an ongoing increase in the kilowatt hours produced per year in the period 2021 to 2025. A significant part of the process will be concentrated on the production and logistics sites in Levanella, Tuscany, with the aim of making the complex of buildings in the area nearly self-sufficient from an energy point of view.
“Sustainability is becoming a key competitive factor for businesses as it increasingly informs the choices of consumers and investors,” said Alfredo De Falco, head of corporate and investment banking, Italy, of UniCredit. “UniCredit is amongst the leading banks in Europe with regard to financing solutions linked to ESG objectives, which can effectively support the transformation of companies’ business models. We are therefore particularly pleased to support Made in Italy excellence such as Prada on its path towards a sustainable economy.”
This is the third such loan for the Italian fashion group. Prada in November 2019 signed with Crédit Agricole Group the first sustainability-linked loan in the luxury goods industry. As per the agreement, Prada will be granted 50 million euros over five years through a Sustainability Term Loan, introducing an annual pricing adjustment based on the achievement of sustainability targets.
The interest rate can be reduced following the achievement of targets related to: the number of stores assigned with an LEED Gold or Platinum Certification; the amount of training hours for employees, and the use of Prada Re-Nylon (regenerated nylon) for the production of goods. Last year, the company inked a second sustainability-linked loan for a total of 75 million euros with the Milan branch of Mizuho Bank Ltd.
Among the recent highlights for Prada in terms of sustainability, the group created a Diversity and Inclusion Advisory Council, co-chaired by artist and activist Theaster Gates and award-winning writer, director and producer Ava DuVernay; revealed it was banning fur; launched the Re-Nylon capsule collection in regenerated nylon; released its first sustainability policy; held sustainability conferences “Shaping the Future,” and was a signatory of the Fashion Pact.
As reported, other fashion companies such as Moncler, Salvatore Ferragamo and Burberry have signed financing packages linked to sustainability.
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