Sustainable Lending and ESG in the Financial Sector

Our ByrneWallace LLP Sustainability & ESG team guides clients in navigating the evolving landscape of green investments, sustainable lending, and regulatory compliance. Our deep understanding of sustainable finance enables us to support your business in securing funding for responsible projects, aligning financial strategies with ESG goals, and driving long-term value.

Sustainable Lending and ESG in the Financial Sector: 

We have advised a number of leading banks and corporate borrowers on the sustainable finance aspects of their finance transactions, including a multi-jurisdictional high value club facility. Examples of this work includes advising:

• both lenders and borrowers on green loans aligned with the Loan Market Association (LMA) green loan principles to finance various eligible green real estate projects, including advising a multi-national retailer in connection with one of the first green loans in Ireland, a €100 million club loan facility aligned with the LMA’s green loan principles to finance a green project involving the construction and development of a sustainable distribution centre;

• Re-Turn, Ireland’s new national Deposit Return Scheme, on its €27.5 million financing by Bank of Ireland for the development and rollout of the Scheme, which was established to help Ireland achieve EU recycling targets for the estimated 2 billion drinks bottles and cans that are consumed in Ireland every year;

• the corporate banking teams in the Irish pillar banks on sustainability-linked loans (SLL) and sleeping SLLs to ensure same are aligned with the Loan Market Association’s (LMA) SLL principles and encouraging borrowers to integrate sustainable practices into their operations;

• an Irish bank on green loan aspects of a development finance facility to a large waste management group for the purposes of financing the construction of a materials recovery facility as part of the transition to a circular economy; and

• Irish lenders on green facilities for borrowers whose business activities are exclusively focused on the green economy (i.e. “pure play” entities), including a revolving credit facility to a sub-fund of an Irish fund whose business activities are deemed environmentally sustainable activities aligned with the EU Taxonomy.

This typically involves negotiations focusing on the setting of key performance indicators and targets, the operation of various loan characteristics linked to use of proceeds and/or meeting targets (e.g. a margin adjustment), the nature and extent of a borrower’s reporting obligations and the manner of verification of a borrower’s performance. At times this requires advising our clients on aspects of their sustainability strategy, and which will become more relevant for those falling within the scope of the Corporate Sustainability Reporting Directive (CSRD).

Social Housing:

We are legal advisor to several of the top tier (tier 3) approved housing bodies (AHBs), advising on:

• social housing portfolio acquisitions utilising the Capital Advanced Leasing Facility (CALF) and Payment and Availability (P&A) funding supports made available to AHBs by the Department of Housing, Local Government and Heritage through local authorities, as well as financings via the Housing Finance Agency (HFA) for a range of turn-key acquisitions, construction projects and forward-fund deals;

• financings from the Department of Housing and the Housing Agency for several cost-rental housing portfolios (CREL) projects, that involve a State equity investment in the CREL schemes;

• social housing schemes funded by the Credit Union social housing fund (the CU AHB Fund); and

• several of the largest international institutional investment deals for funding into both the social and cost-rental sector, including financings by Nord LB; LGIM Real Assets and MEAG – many of which include borrower obligations around the manner in which sustainability risks are integrated into their investment decisions and policies.

Environmental Protection Agency:

We act for the Environmental Protection Agency (EPA) in relation to their finance and security-related requirements. Including:

• advising the EPA on the implementation of their financial provisioning requirements pursuant to EPA guidelines for managing environmental risks, protection of the environment, and minimising the exposure of the State to the cost of remediating environmental damage and pollution that can result from licensee breaches, or from failure to properly comply with EPA requirements under environmental licences;

• advising the EPA on the perfection of security to fully and adequately secure against the cost of potential remediation due to environmental incidents, as well as the costs of site closure at the end of the operating life of a licensed facility; and

• advisory work in relation to financial instrument instruments and template documentation. 

Development Finance for Green Real Estate:

We act for an alternative residential lender in relation to development facilities to small and medium sized residential developers to assist them to deliver nearly zero-energy building standard (NZEB) residential and social housing to address the housing shortage in Ireland.

In assessing any application for development funding, the lender will assess any potential positive ESG credentials, and conduct an ESG and impact assessment on every transaction in order to ensure its funding will assist in the delivery of the appropriate residential development which will meet all relevant ESG criteria. 

Other Social Funding:

We advise various public sector clients on ESG-related matters including acting for a public sector body in connection with capital assistance funding for various charitable organisations providing services to the public.