LCI & SMFL launch Social Loan Framework for heli leasing, finance and ops
LCI and Sumitomo Mitsui Finance and Leasing Co (SMFL) have launched the first Social Loan Framework for helicopter leasing, finance and operations to exploit the $1.6trn sustainable finance market.
The venture will require funds to be used for eligible and verified social projects. For LCI, this includes search and rescue (SAR) and emergency medical services (EMS). The framework has been established initially for LCI’s joint venture leasing operation with SMFL. It was developed in accordance with the internationally agreed Social Loan Principles developed this year by the Loan Syndications and Trading Association (LSTA).
Alan O’Rourke, chief financial officer, LCI told Helicopter Investor: “Helicopters play a vital and unique role in social good and it’s important that we, as an industry, strive to promote this. By doing so, we will gain meaningful access to the large and fast growing social and sustainable finance market, and access new pools of external capital that will make an enormous difference to communities around the world.”
The Social Loan Framework builds upon LCI’s track record of financial innovation and will make a significant difference to the company’s customers and the communities they serve, he added. “It will require our social loans to adhere to a number of core principles including fund usage, calibration, characterisation, reporting and verification, all of which will support our drive to attract new and efficient forms of capital to the helicopter sector which have a positive social impact.”
The Social Loan Framework has received the highest rating of Social 1(F) from the Japan Credit Rating Agency.
The global sustainable finance market was valued at $1.6trn in 2021. Of this, $600bn was driven by the sustainability-linked loan (SLL) market, according to Refinitiv data.
The framework is a key part of LCI’s Environmental, Social, and Governance (ESG) programme, according to the company. “It reflects SMFL’s long term commitment to the UN’s Sustainable Development Goals as part of the company policy ‘The SMFL Way’,” it added.
Meanwhile, LCI is a signatory of Aircraft Leasing Ireland’s (ALI) Sustainability Charter. This involves a commitment to achieving ESG-related goals, focused around 10 priority sustainability principles. These include a commitment to achieving net zero carbon emissions by 2050. Since its launch 19 years ago, LCI has undertaken about $10bn of aviation transactions and provides leasing services to operators, governments and end-users.
SMFL acquired a 35% stake in LCI, Helicopter Investor reported in March. Building on the partnership forged in September 2020, SMFL and LCI’s parent company Libra Group plan to grow LCI’s business by US$1.5bn over the coming years with significant capital investment by shareholders. The major investment will enable LCI to accelerate its planned growth over the next five years, according to the lessor.