The interest rate on a Philips loan will rise and fall with its sustainability rating

Dutch health technology giant Philips has been granted a €1 billion ($1.1 billion) credit facility with an interest rate tied to the company’s sustainability rating.

The deal, arranged by ING on behalf of a consortium of 16 lenders, is believed to be the first corporate financing tied to sustainability metrics.

Sustainalytics, a sustainability research and ratings firm, provides Philips’ performance benchmarking based on a variety of environmental, social and governance measures.

The loan’s interest rate will rise or fall based on fluctuations in Sustainalytics’s rating for Philips.

Other terms of the facility weren’t disclosed. It replaces a prior €1.8 billion ($2 billion) line of credit that Philips had not tapped into.

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Photo credit: ING

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