ESG and Lending Tied Together in Real Life
By George Wilson
On April 6, 2021, BlackRock filed an Item 2.03 Form 8-K disclosing a new credit agreement. Generally, this is not a particularly newsworthy event. This agreement though, while increasing the company’s revolving credit line by $400,000,000 to $4,400,000,000, also includes provisions linking the interest rate and commitment fee to various ESG factors.
BlackRock’s lending costs can increase or decrease depending on how well it meets or fails to meet targets related to:
- Black, African American, Hispanic and Latino Employment Rate,
- Female Leadership Rate, and
- Sustainable Investing AUM (Assets Under Management) Amount.
You can find the details of the ESG adjustments in the amendment to the credit agreement filed as an exhibit to the Form 8-K.
You can read more about BlackRock’s ESG perspectives in this Letter to CEOs from BlackRock Chairman and CEO, Larry Fink.
This new lending arrangement puts ESG even more squarely in the spotlight for BlackRock.
As always, your thoughts and comments are welcome.