Corporate Social Contributions Can Affect Borrowing Rates

This is a case of putting your money where your mouth is.

There is a term gaining considerable attention in business circles these days – it’s called ESG or Environment, Social and Governance.

Basically, it is a framework that will make business leaders direct more and more of their attention to ‘social’ contracts or license in their broader decision making as they show how they are helping the community as well as delivering valuable goods or services. And a new lending arrangement created by BMO Bank of Montreal and one of its clients is showing how this will or can be done.

The deal is between the bank and Gibson Energy which has a large operation in Moose Jaw and other businesses in the southeast and west-central part of the province.

It is a revolving loan or credit facility…pretty standard so far. But here’s where it enters new territory. The interest rate the company will pay will go up and down based on their ability to meet targets such as women in executive or board seats and specific reductions in greenhouse gas emissions.