SK Geocentric Raises 475 Billion KRW in Sustainability-Linked Loans from 5 Global Banks

Five Global Banks Including BNP Paribas
Link ESG Management Goals with Financial Agreements
"Favorable Financing Conditions Amid Challenging Financial Environment"

[Asia Economy Reporter Choi Seoyoon] SK Geocentric has succeeded in raising a total of 475 billion KRW through a Sustainability-Linked Loan (SLL), recognized by global banks for its eco-friendly business vision despite challenging financial conditions.

On the 15th, SK Geocentric announced that it signed a three-year Sustainability-Linked Loan agreement with a consortium of five global financial institutions: BNP Paribas (France), Agricultural Bank of China, Bank of China (both China), MUFG Bank (Japan), and Cr?dit Agricole CIB (France). The signing ceremony was held at the SK Seorin Building in Jongno-gu, Seoul, attended by SK Geocentric CEO Na Kyungsoo, SK Innovation CFO Kim Yangseop, and key executives from the five global banks.

This SLL is the first successful case in Korea to receive verification from the international external certification body Det Norske Veritas (DNV). DNV described the sustainability-linked loan targets set by SK Geocentric as highly ambitious, stating that the target levels meet global standards and are deemed genuine. SK Geocentric submitted its eco-friendly management goals, verified by DNV, to the banks, which contributed to the positive evaluation.

SK Geocentric plans to use the secured funds to expand ESG projects, including the Ulsan Recycle Cluster (a comprehensive plastic recycling complex), which will be the world’s first of its kind to be established by 2025. The Ulsan Recycle Cluster will be built on a 215,000㎡ site (approximately 65,000 pyeong) and will have the capacity to process about 250,000 tons of waste plastic annually.

SLL is one of the ESG capital-raising methods, where financial institutions provide loans linked to a company’s ESG management goals. It is mainly practiced by companies and banks in advanced countries such as Europe. When ESG management goals are achieved, additional interest rate benefits are granted. The scale of global ESG financing, including SLL, has rapidly increased from $238.5 billion in 2018 to $1.5706 trillion last year. Leading global companies such as Henkel, a global consumer and industrial goods company, have also implemented SLL.

SK Geocentric set two goals linked to the SLL: increasing plastic recycling volume (900,000 tons by 2025) and reducing greenhouse gas emissions (a 24.9% reduction compared to 2019 by 2025). SK Geocentric began reviewing participation in the SLL earlier this year. Considering the recent sharp rise in interest rates and the extremely difficult financial environment for companies to raise funds, this success in capital raising under competitive conditions through an ESG goal-linked product is significant.

Going forward, the lending consortium will verify the achievement level of the set goals and adjust interest rates accordingly. The consortium and SK Geocentric will work together to ensure that the funds are continuously used in the agreed eco-friendly areas. SK Geocentric will disclose related goals and implementation plans on its company website and continuously monitor the achievement levels.

CEO Na said, “It is highly meaningful that large-scale funding for the company’s eco-friendly business, such as waste plastic recycling, has been conducted and recognized for the first time in Korea through a sustainability-linked loan verified by a global certification body.” He added, “SK Geocentric will simultaneously pursue eco-friendly business promotion and social responsibility, establishing itself as a global leader in the circular economy sector.”

Philippe Noirault, BNP Paribas Korea Representative, said, “SLL is characterized by banks working together with companies in the process of achieving ESG goals. We will work together to help SK Geocentric grow as a leading eco-friendly company addressing the waste plastic issue.”

This content was produced with the assistance of AI translation services.