Etihad raises $1.2bn in aviation’s first sustainability-linked ESG loan

UAE national carrier Etihad Airways has raised $1.2bn in the first sustainability-linked loan (SLL) tied to environmental, social and governance (ESG) targets in global aviation.

The transaction is the largest sustainable financing in the airline’s history and follows two similar financing deals – a sustainability-linked transition sukuk in 2020 and a loan tied to the UN Sustainable Development Goals in 2019.

Read: UAE’s Etihad issues $600m sustainability-linked sukuk

The terms of the latest loan are linked to multiple KPIs tied to the ESG initiatives and will be independently assessed.

With regards to environmental goals, it involves reducing the carbon emissions intensity of the passenger fleet, as measured in terms of CO2 emissions per revenue tonne kilometres. As part of its Greenliner Programme, Etihad has committed to an ambitious target of net zero carbon emissions by 2050 and has set key milestone goals for 2035 and 2025.

As part of its social goals, Etihad has established the Global Business Service Solution (GBSS) centre in Al Ain, UAE, to contribute towards the socioeconomic development of the community and to increase employment and upskilling of Emirati women in the aviation sector. This KPIs will measure both female participation and ongoing training and development.

The third set of goals will be geared towards its governance and includes Etihad upholds high standards of corporate governance, ethics and integrity. This KPI will be linked to the Integrity Score, a comprehensive measure used to assess the overall internal culture of integrity at the airline.

“Our goals will have a real-world impact, and to underscore our accountability, we have committed to penalties and incentives of up to $ 5.5m linked to our progress against key performance indicators,” said Adam Boukadida, CFO at Etihad Aviation Group.

Etihad had selected HSBC and First Abu Dhabi Bank as the strategic partners and financiers for its latest transaction.