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Gildan Inks Sustainability-Linked Loan

Gildan Activewear Inc. said it has signed an amended and restated credit agreement to its existing $1 billion revolving credit facility to incorporate sustainability-linked terms, underscoring the company’s commitment toward its environmental, social and governance (ESG) targets.

The amendment introduces an annual pricing adjustment based on the achievement of three of Gildan’s Next Generation ESG targets that were communicated at the beginning of this year. Gildan, based in Montreal, said is the first Canadian apparel manufacturing company to tie financing costs to the achievement of important ESG targets.

“Sustainability is a key pillar of our Gildan Sustainable Growth strategy, and this sustainability-linked facility is further evidence of our pledge to making meaningful advancements by 2030 in the areas of climate change, circularity, and diversity, equity, and inclusion,” said Rhodri Harries, executive vice president, and chief financial and administrative officer at Gildan.

Last week, the company launched Gildan Respects, a global positioning of its ESG program and creative campaign supporting the company’s “Next Generation ESG” strategy.

The amended and restated five-year revolving credit facility includes terms that reduce or increase the borrowing costs based on the company’s annual performance against three recently announced ESG targets.

In climate change, Gildan aims to reduce Scope 1 and Scope 2 greenhouse gas (GHG) emissions by 30 percent by 2030, in alignment with the Science Based Targets initiative (SBTi) and the level of decarbonization required to meet the goals of the Paris Agreement.

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In circularity, Gildan’s goal is to have 75 percent of its packaging and trims specific to apparel SKUs to contain recycled or sustainable materials by 2027. In diversity, equity, and inclusion, the achievement of gender parity by 2027 for Gildan’s employee group encompassing the director level and above is the target.

BMO Financial Group is acting as lead sustainability structuring agent, and TD Financial Group and CIBC Financial Group are acting as co-lead sustainability structuring agents for Gildan’s sustainability-linked loan.

Gildan is a manufacturer of basic apparel marketed in North America, Europe, Asia Pacific and Latin America under a portfolio of company-owned brands, including Gildan, American Apparel, Comfort Colors, Goldtoe and Peds, and under the Under Armour brand through a sock licensing agreement providing exclusive distribution rights in the U.S. and Canada. The company’s product offerings include activewear, underwear and socks sold to a broad range of customers, including wholesale distributors, screenprinters or embellishers, as well as to retailers that sell to consumers through their physical stores and/or e-commerce platforms, and to global lifestyle brand companies.

Gildan owns and operates vertically integrated, large-scale manufacturing facilities primarily located in Central America, the Caribbean, North America and Bangladesh.

The company joins other industry names pursuing sustainable financing solutions, including Prada, which became the first luxury firm to secure a sustainability-linked loan when it signed a deal with Credit Agricole Group in 2019. Other boldface names like Amazon and Walmart have also secured sustainable and green bonds. VF Corp. has discussed in detail how its green bond furthered the Supreme owner’s climate goals.