Green is the New Black: Prada and Crédit Agricole Group sign a sustainability term loan

November 27, 2019

1 min read

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What's going on here?

Prada has signed a 5 year sustainability term loan worth £43 million with French banking group Crédit Agricole.

What does this mean?

The agreement is the first of its kind in the luxury industry. If Prada fulfils specific sustainability-related targets, the agreement will allow the luxury brand to adjust their interest rates on an annual basis.

The three objectives chosen by Crédit Agricole are: 

  1. Prada employees training or working for a certain amount of time;
  2.  A certain number of Prada stores are certified either Gold or Platinum by LEED (Leadership in Energy and Environmental Design);
  3. Prada to meet its target in increasing the use of Econyl, a sustainable nylon substitute, to manufacture its products.

What's the big picture effect?

Although the loan is the first of kind in the luxury industry, according to Environmental Finance, the sustainability-linked loan market has increased in value from US$5 billion to $40 billion. 

The eight-fold increase suggests that banks are increasingly incorporating more sustainable methods when financing companies. This is likely to further increase as businesses look to adopt sustainability strategies in their business models with consumers becoming more environmentally aware. 

The same is hoped for the fashion industry which holds second place as the second biggest polluter after the oil industry. Eco-friendly changes such as North Face using synthetic spider silk to mass produce its Moon Parkas;Chanel, Burberry, and Gucci’s move away from the use of fur; and Prada’s pledge to phase out the use of virgin nylon by 2021 act as positive indicators for better commitments to sustainability within the industry.

Report written by Heerim Hwang

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