Information and communication technology company Ericsson announced today that it has signed a $2 billion sustainability-linked credit facility, tying its cost of debt to its progress on the company’s climate goals, and to its suppliers’ climate targets.

Heather Johnson, VP of Sustainability and Corporate Responsibility, said:

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“With over two decades of sustainability research and lifecycle assessments, Ericsson has a long and proud history in the sustainability space. We are delighted that we now also can link our climate action targets to our Ericsson financial activities. Taking this step fully reflects our company purpose, where sustainability is fundamental to the way we do business.”

Sustainability linked securities and loans are a rapidly emerging form of sustainable finance, with attributes including interest payments tied to an issuer’s achievement of key performance indicators (KPIs) and associated sustainability performance targets (SPTs). Under the terms of Ericsson’s credit facility, interest margin will be linked to two KPIs, including the company’s goal to achieve carbon neutrality in its operations by 2030, and its ambition to have suppliers set 1.5 C° aligned climate targets.

Ericsson’s supply chain represents the vast majority of the company’s carbon footprint, and the company has set a goal to engage with 350 high-emitting and strategic suppliers to set their own 1.5°C aligned climate targets by 2025.

Carl Mellander, CFO, said:

“Sustainability is an integral part of Ericsson’s strategy and has been critical for our success in recent years, not least when it comes to work within energy consumption and the energy performance of our products. Incorporating sustainability KPIs into this new credit facility is an important step in our continuous work to integrate our sustainability ambitions throughout our operations.”

18 banks participated in the facility, with HSBC  and SEB acting as Coordinators, and SEB also acting as Sustainability Coordinator.