Prada is known for being a trailblazer from a design perspective, but the brand just upped the ante on the “green” front after entering into what it is being called the first business loan in the luxury goods sector that links the annual interest rate with the brand’s sustainability-centric milestones. According to the Associated Press, Prada Group, the parent of the Milan-based fashion brand, confirmed on Tuesday that it has been given a five-year 50 million-euro ($55 million) loan from Crédit Agricole Group that will see its interest rates lowered based on “achievement of ambitious targets related to sustainability.”
The AP revealed on Tuesday that the loan from Montrouge, France-headquartered Crédit Agricole will be subject to interest rate reductions should the 106-year old fashion brand – which is known for its Miuciaa Prada-designed ugly-chic aesthetic and nylon handbags – meet the targets it agreed upon with Crédit Agricole. Among the determining factors are the number of Prada Group-owned stores that meet Leed Gold or Platinum Certification standards for “green” buildings; the number of sustainability training hours and education workshops the brand hosts for its employees; and the extend of its use of regenerated nylon in its seasonal collections,” the latter of which comes in line with the brand’s adoption of recycled nylon made from plastic recovered from oceans in its signature nylon bags as part of an effort called Prada Re-Nylon.
While Prada Group’s new loan is, in fact, the first of its kind, Mario Ortelli, managing partner of luxury advisory firm Ortelli&Co., told Vogue Business that it is likely just the beginning: “Now that [luxury] consumer and company awareness of sustainability has noticeably increased, a lot of other companies are to be expected to take on sustainability-linked loans.”
Vogue Business reveals that “similar loans have been making inroads elsewhere,” pointing to growth in the sustainability-linked loan market, which is up “from $5 billion in 2017 to $40 billion in 2018,” with Crédit Agricole previously signing off on “sustainability-linked loans with entities like natural gas distribution company Enel and Hong Kong’s Swire Properties.”
In a statement on Tuesday, Prada Group chief financial officer Alessandra Cozzani said that the new loan structure “demonstrates how sustainability is a key element for the development of the Prada Group, [and] increasingly integrated into our strategy,” which includes not just its marquee Prada brand, but also little sister label Miu Miu, Church’s and Car Shoe.
As for the luxury sector, as a whole, Alberto Bezzi, a senior banker at Credit Agricole Corporate and Investment Bank, said it is “increasingly committed to achieving sustainable development, pointing, in particular to the new Prada deal, which he says “confirms the efforts made by Prada to undertake and cultivate virtuous behaviors capable of contributing to responsible growth.”