BBVA Corporate & Investment Banking (CIB) has partnered with Dutch pension fund investor PGGM on a €2 billion ($2.1 billion) risk-sharing transaction, setting a new standard in sustainable finance. The deal incorporates an ESG-linked pricing mechanism, tying 40% of the portfolio to Environmental, Social, and Governance (ESG) performance metrics. This first-of-its-kind structure links capital costs to sustainability targets, marking a milestone in the integration of ESG factors into capital markets.
This marks BBVA’s fourth collaboration with PGGM, further solidifying their long-term partnership focused on advancing sustainable finance. The transaction incentivises companies within the portfolio to meet sustainability goals such as reducing greenhouse gas emissions, improving water efficiency, and increasing gender diversity in leadership.
The deal is structured to comply with the European Union’s Simple, Transparent, and Standardised (STS) criteria, offering BBVA 81% capital relief and boosting capital efficiency. The loan portfolio spans large corporate clients across the United States, Spain, and other European markets, reflecting BBVA’s global reach and commitment to sustainable growth.
“This ESG-linked synthetic securitisation is a milestone in sustainable finance, demonstrating the potential for capital markets to drive meaningful ESG impact. Our continued partnership with PGGM highlights our dedication to creating innovative capital solutions that support our clients’ sustainability objectives,” said Pablo Fenoll, Head of Portfolio Management at BBVA CIB.
“Collaborating with BBVA, who is a highly valued risk sharing partner with strong sustainability credentials, in incentivising its corporate client base to adopt more sustainable business practices fits very well with those ambitions” added Meindert de Jong, Director of Credit Risk Sharing at PGGM.