Spanish-headquartered renewable energy giant Siemens Gamesa has signed a bank guarantee line for up to €600mn. The facility, which covers the construction of components for an offshore wind farm, also incorporates a dual environmental and social sustainability purpose.

Hornsea 2 is the largest offshore wind farm to date. Located in the North Sea and owned by Danish utility company Ørsted, it will consist of 165 Siemens Gamesa wind turbines capable of producing enough clean energy to power 1.3 million UK households.

BNP Paribas acted as sustainability global advisor and mandated lead arranger for the deal, which also saw participation from BBVA, Mizuho and Santander.

The facility is linked to fulfilment of certain environmental, social and governance (ESG) criteria by Siemens Gamesa, and – rather uniquely – will ultimately raise funds for an entirely separate project for cancer research in Spain.

The deal involves a novel sustainability-linked mechanism – a first in the trade finance space, according to BNP Paribas. Under this agreement, Siemens Gamesa will pay a premium if it fails to achieve the defined ESG targets; should the targets be met, the premium will be paid by BNP Paribas, together with BBVA and Santander. In either case, the established premium will be used to support an early breast cancer detection research programme at the Hospital La Paz Institute for Health Research in Madrid.

“Accelerating environmental and social impact through trade finance mechanisms is an important step in embedding sustainable finance into the way we can support corporates and investors to achieve their sustainability ambitions,” says Rodolphe Vergeaud, head of CIB Emea trade and working capital solutions at BNP Paribas.

Earlier this year, Viktor Ivanov, BNP Paribas’ head of sustainability for transaction banking Emea, spoke to GTR about the ways in which the bank is harnessing existing sustainability frameworks from the wider finance industry to deploy innovative solutions for trade finance.

He explained that BNP Paribas had recently closed a sustainability linked letter of credit (LC) – again a market first – which combined two underlying “logics” of sustainability. Ivanov, who was unable to name the client, said: “The LC finances the purchase of equipment with a clear sustainability benefit, in this case energy recycling… The transaction also involves a sustainability-linked mechanism, which creates an incentive for our client to fully extract the environmental benefits of their investment. Objectives were defined for the expected energy savings – depending on whether they are achieved, the client can benefit from a rebate on the LC fee. Bottom line, we are financing sustainable equipment, which is good, and then fostering its use, which is even better.”

In the last two years Siemens Gamesa has completed deals worth over €7.2bn with a strong sustainable component. Its novel transactions in the past year include a €174mn sustainability-linked FX hedge and a three-year interest rate swap, in which BNP Paribas reinvests the premium into reforestation projects. In addition, it completed a €2.5bn sustainability-linked syndicated facility in December last year, for which BNP Paribas acted as sole sustainability agent.

According to Thomas Spannring, acting CFO of Siemens Gamesa, the new deal is a “continuation of Siemens Gamesa’s focus on sustainability in finance and strengthens it at a difficult time for all of society, in which we must go that extra mile in supporting medical research”.