Women in Boardroom Count Toward Companies’ Borrowing Costs

Companies around the world are increasingly willing to link their borrowing costs to gender equality, as they face pressure to lift the number of women in management.

Dubai-based mall firm Majid Al Futtaim Holding LLC signed a $1.5 billion sustainability-linked loan last week, agreeing to pay extra in interest rates if it failed to increase the share of women on its board or in senior roles to 30%. That followed Australian supermarket chain Coles Group Ltd. taking a similar step with its A$1.3 billion ($1 billion) loan.

Sales of loans with terms tied to gender goals have surged to $19 billion so far this year, more than four times 2020’s total, according to BloombergNEF data. That kind of growth is exceptional even within the booming market for ethical debt, reflecting the push to factor in social justice taking off since the pandemic and the #MeToo movement.

“Companies are using these products to help drive performance and cultural change in line with their corporate strategies,” said Tania Smith, director of sustainable finance at Australia & New Zealand Banking Group Ltd., which led the deal for Coles. “Improved workplace diversity can enhance staff retention, improve collaboration, enrich decision making and enable access to a wider talent pool.” 

Women in Boardroom Count Toward Companies’ Borrowing Costs

The volume of such debt is still just a fraction of the $231 billion in loans this year with disclosed metrics for environmental, social and governance (ESG) targets. It’s an even smaller proportion in the bond market, making up around $3 billion or 5% of sustainability-linked bonds, where metrics involving the environment have dominated.

Banks arranging loans are expecting more such transactions on the back of increased inquiries about gender metrics. Socially-focused debt jumped onto investors’ radars last year when the European Union broke demand records with its debut.

“We have witnessed over the past two years a significant number of borrowers wanting to demonstrate that they have a holistic approach to sustainability,” said Hedi Ben Salem, head of corporate lending for Europe and Asia at Banco Bilbao Vizcaya Argentaria SA. “We firmly believe that this trend is set to continue.”

It’s leading to companies combining environmental and social targets when structuring sustainability-linked loans. Women in management positions and work safety are the most-used social key performance indicators in recent financing, Ben Salem said. The U.K. also plans to combine social and green benefits in its ESG bond debut this month.

Regulatory requirements for listed companies to disclose senior female representation in countries such as the U.K., U.S., Hong Kong and Japan have helped push companies to improve, said Nneka Chike-Obi, director for sustainable finance at Fitch Ratings.

A recent deal by U.S. gas pipeline company Enbridge Inc., where only one of three goals in its sustainability-linked bond were tied to emissions, shows “an evolution in focus on diversity and inclusion,” she said.  The others were on racial and ethnic diversity, and women on the board.

In the U.S., the proportion of women on a majority of S&P 500 boards rose above 30% for the first time last month, a result of years of investor pressure and regulations. Majid Al Futtaim’s Chief Executive Alain Bejjani is nearly half way there, and wants to achieve that level in five years.

It’s hard to know yet if the risk of higher borrowing costs has improved equality. Sustainability-linked debt overall has come under fire for some firms setting targets that are either easy to reach or that they were going to make anyway.

Suez Environnement took a SLL in 2019, and data from 2020 shows a small increase in its percentage of women in senior management, but below a goal of 33%, said Fitch’s Nneka. Likewise, Continental AG’s 2019 SLL set a similar target of 25% women by 2025 and reported an increase of just 0.3% from 2019 to 2020.

“The bulk of sustainability-linked products have been issued since 2020, so it is too early to say if there has been any impact,” she said.


Europe’s primary market is seeing some rare offerings from the Isle of Man and East Japan Railway Co. 

  • The British Crown dependency is seeking a sustainability deal denominated in pounds, its first bond issue since 2002.
  • East Japan Railway Co. is planning a deal also denominated in pounds, its first in the British currency since 2007, as well as debuting with notes in euros.
  • Elsewhere, The United Kingdom Debt Management Office has mandated banks to lead its inaugural green gilt.
  • Mondelez International Inc. plans to seek more debt that gives it an incentive to improve environmental, social and governance practices across its supply chain after the sale of its first green bonds on Thursday.


Fresh problems at China Evergrande Group emerged this week, as non-bank creditors demanded immediate loan repayments and as the indebted developer warned it risks defaulting on borrowings. 

  • Meanwhile, at least eight Asian issuers may sell global bonds in the coming weeks and months including China’s Chindata Group Holdings and Zensun Group.
  • Hong Kong’s Great Eagle Holdings has mandated an issue, while Indonesia’s Kawasan Industri Jababeka and Perusahaan Pengelola Aset PT are also planning new deals.
  • South Korea itself has hired banks to manage an offshore bond sale, while the country’s two major lenders Hana Bank and Industrial bank of Korea have lined up debt plans.


Wall Street estimates for September investment-grade bond supply are centered around $140 billion, according to an informal survey of debt underwriters. 

  • Companies will continue the aggressive borrowing seen through most of 2021, helped by the low-rate environment and driven by the necessity of funding a growing pipeline of M&A activity.
  • U.S. retailer Nordstrom Inc. saw its credit rating cut to junk by Moody’s, following a similar move by S&P last year.
  • Levi Strauss & Co.’s gross debt will fall back to pre-pandemic levels after it redeems the $200 million left outstanding of its 5% bonds due in 2025, the company said in a statement Wednesday. The blue-jean maker was among hordes of companies that hit the junk-bond market last year to shore up liquidity during the pandemic.

©2021 Bloomberg L.P.

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