SK Innovation is first Korean firm to secure ‘green loan’SK Innovation secured 800 billion won ($659 million) through green lending for its electric vehicle battery business, the company said Thursday.
Green lending is a type of corporate financing in which companies borrow money at a lower interest rate for eco-friendly products or services. Projects in fields like renewable energy and electric vehicles (EV) around the world have benefited from green lending.
In recent years, many global companies have raised funds through this method for sustainability-related businesses. SK Innovation is the first Korean company to do so.
The company raised a total of 800 billion won in three regions, the United States, Europe and China, where the company has regional corporations.
The funds will be used for SK’s investment plans across the three regions. They include EV battery plants in the United States and Hungary as well as factories in China and Poland for lithium ion battery separators (LiBS), a core component that divides the anode and cathode inside the EV battery. All four factories are currently under construction.
The two EV battery plants - in the U.S. state of Georgia and Komarom, Hungary - are slated to start mass production in 2022. This will boost SK’s battery production capacity to 40 gigawatt hours by 2022. The two LiBS factories in China and Poland are aiming to increase SK’s global production capacity to 2.5 billion square meters a year by 2025.
SK expanding LiBS production facilities may also be meaningful for other local EV battery makers as well because the core component’s main supplier up to now has been Japanese firms.
SK Innovation will receive the funds from this month through 2020. Unlike bonds, green lending can be given in installments rather than in a lump sum. This allows the borrower to manage their financials and receive the loans according to the project’s progress, SK said.
In order to secure funding, green lending borrowers are required to report how the funded project can contribute to environmental sustainability objectives and receive verification on this from qualified parties.
“The successful receipt of the green loan is approval of the environmental value and growth potential in our EV battery and LiBS businesses,” said Lim Su-gil, SK Innovation head of public relations.
BY SONG KYOUNG-SON [firstname.lastname@example.org]