Date: Wed. Oct. 26 2022
Media: ESG Today
What happened?
The German company, Mercedes Benz, secured an 11 billion € sustainability-linked loan for its sustainable strategy “Ambition 2039” (they want to offer carbon neutral cars).
Whom and where it affects?
The news specifically affects a German car company, Mercedes Benz. But it also affects the rest of the companies that compound the automotive industry. The fact that Mercedes started to use this type of financing loan, shows to the sector how the company’s future moves will continue being and how they have to react to compete in a changing world that is increasingly concerned about climate change and the CO2 emissions.
What sort of public or private institutions are involved?
Directly is involved Mercedes ( a private company). Banks are also involved since they are the ones who provides the credit.
However, in 2014, the Spanish government also gave Mercedes 27 million dollars for its plant headquartered in Vitoria, allocated to promote sustainable industrial activity, so public institutions were involved in this plan of the company as well.
Why is it important for Banking and Finance?
Because it starts a trend for the automotive industry and how to finance their change to a new type of cars that produces less pollution and CO2 emissions, highlighting it’s not all about creating a cleaner car, but also about the way it is financed.
What do you think will be the consequences in the foreseeable future?
From our point of view, companies will be aware about the profitability of Mercedes, observing if this type of financing it’s not only worth it to climate change, but is also profitable to the company, keeping in mind how investors will react. If the industry concludes that this type of loans are worthwhile, it will result in an increase of sustainability-linked loans in the long term future.
Keywords: Mercedes Benz, sustainable-linked loans, automotive industry, CO2 emissions
SDG: 9. Industry, innovation and infrastructure: inclusive and sustainable industrialization, 11. Sustainable cities and communities: affordable and sustainable transport systems and 12. Responsible consumption and production: sustainable management and use of natural resources.