Tata Communications secures $250m sustainability-linked loan to boost eco-friendly initiatives
Tata Communications has successfully secured a five-year sustainability-linked loan (SLL) valued at $250 million, in collaboration with ANZ, DBS Bank, and Export Development Canada (EDC). This marks a significant step in the company’s financial strategy, aligning its funding mechanisms with its ambitious sustainability goals. ANZ led the coordination of the loan as the Lead Sustainability Coordinator, with DBS Bank and EDC serving as Joint Sustainability Coordinators.
This transaction is pioneering for Tata Communications, representing the first SLL under the company’s newly established SLL framework. This framework is a novel approach within the sector in India, linking the loan’s interest rate margins to the company’s performance in reducing carbon emissions. Such alignment underscores Tata Communications’ commitment to achieving Net Zero across its global operations by 2035.
The loan’s structure incentivizes Tata Communications to meet short-term carbon emission reduction targets, effectively tying the cost of capital to environmental performance. This innovative financial model is expected to drive significant environmental benefits and set a precedent for other companies in the region to adopt sustainability-focused financial strategies.
Stella Saris Chow, Head of Sustainable Finance International at ANZ, expressed pride in leading the loan initiative, noting the potential to inspire other companies in Asia to align their financing with environmental goals. Kabir Ahmed Shakir, CFO of Tata Communications, highlighted the transaction as a landmark in promoting sustainability as a core business value. Rajat Verma of DBS Bank India and Todd Winterhalt from EDC also echoed these sentiments, emphasizing their organizations’ commitment to supporting sustainable financial practices.
The adoption of sustainability-linked loans like the one secured by Tata Communications reflects a growing trend where companies are held financially accountable for their environmental impact. This approach not only helps reduce emissions but also aligns financial strategies with long-term sustainability commitments, potentially reshaping how companies approach both finance and environmental responsibility.