Introducing the world’s first sustainability improvement derivative

13 August 2019 ... min read

Companies are becoming more open to getting measured on environmental, social and governance (ESG) goals, and ING is encouraging them to expand such goals by providing financial incentives. Today, we announced the world’s first sustainability improvement derivative (SID) provided to SBM Offshore, a global company that supplies floating production solutions to the offshore energy industry.

Another first in sustainable finance

The SID is an interest rate swap that hedges the interest rate risk of the construction of one of SBM Offshore’s Floating Production Storage and Offloading facilities. It’s the world’s first derivative with a price linked to the company’s sustainability performance, next to trading risk, capital requirements and profit. The credit spread of the SID can increase or decrease based on SBM Offshore’s ESG performance, as scored by Sustainalytics, an independent provider of ESG research and ratings.

“The introduction of the SID is a logical next step to support our clients to integrate sustainability into all their financing needs to achieve their sustainable ambitions,” said Leonie Schreve, global head of Sustainable Finance at ING.

“I want to welcome our first client, SBM Offshore, and thank them for their trust in our service. I hope that many more companies will follow because in the end, sustainable business is better business.”

The SID is the second financial product launched by ING to help improve the sustainability performance of clients. In 2017, ING became the first bank worldwide to provide a sustainability improvement loan, having participated in 59 since then, with a total volume of €5.47 billion.

Read today’s press release.

What's an interest rate swap?

Interest rate swaps are forward contracts where one stream of future interest payments is exchanged for another, based on a specified principal amount. The aim of these swaps is to reduce or increase exposure to fluctuations in interest rates.

Still got questions? Watch this video on Investopedia (1:37).

About SBM Offshore

SBM Offshore provides floating production solutions to the offshore energy industry over the full product life-cycle. The company is a market leader in leased floating production systems, with main activities such as the design, supply, installation, operation and life extension of floating production, storage and offloading vessels. These are either owned and operated by SBM Offshore and leased to its clients or supplied on a turnkey sale basis.

The Group is committed to conducting business in a sustainable way by developing close relationships with local people, communities and businesses in host countries, and safeguarding the natural environment.

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