Case Studies
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Centrus advises TRIG, a renewable energy investment group, on its first ESG-linked inflation hedging transaction

In a continued drive to expand the financial aspects of the business which align to common Environmental, Social and Governance (ESG) goals, TRIG has entered into a series of inflation linked derivatives (RPI and CPI) which are directly linked to the Company’s sustainability performance.

Building on TRIG’s sector first ESG-linked revolving credit facility and subsequent ESG-linked FX hedging, InfraRed, TRIG’s investment manager, joined forces with financial advisor Centrus and hedge providers NatWest, Santander, ING, NAB and SMBC to implement what is the first ESG-linked multi-party inflation hedging programme for all parties involved across RPI and CPI. As part of the agreement, TRIG will receive a sustainability payment when it delivers against its established ESG goals and donate additional money to its community funds, benefiting the communities in which TRIG operates, should it fail to do so.

These ESG goals, which are aligned to TRIG’s existing targets, also help to generate cleaner energy and support jobs in local communities. The metrics measured include:

  • The number of homes powered by clean energy from TRIG’s portfolio
  • The number of community funds supported by TRIG
  • Maintenance of a low Lost Time Accident Frequency Rate (LTAFR)*
Phil George, Head of Portfolio Management for TRIG said: TRIG is delighted to have worked with Centrus and its hedging banks to implement a ground-breaking sustainability-linked inflation hedging agreement. We are committed to embedding sustainability into all our activities across the full investment cycle to help ensure sustainable returns for our investors.
Mark Taheny, Director at Centrus said: What TRIG has achieved through this transaction was no small feat, they intentionally chose the more difficult path to break new ground in ESG derivatives. The banks involved really went the extra mile to deliver for the client and to set a very high standard for the future of ESG derivatives. While this is certainly a first in many ways, we as a group hope to see and facilitate many similar transactions in the future continuing our goal of delivering finance with purpose.

TRIG’s diversified portfolio includes onshore and offshore wind farms and solar parks in the UK and Europe. These assets generate revenues from the sale of electricity and government-backed green benefits, many of which are inflation linked, such as the Low Carbon Contract Companies Contract-for-Difference (CfD) and Ofgem’s Renewable Obligation Certificates. The Company aims to provide investors with long-term, stable dividends and to retain the portfolio’s capital through re-investment of surplus cash flows after payment of dividends.

TRIG was one of the first investment companies investing in renewable energy infrastructure projects listed on the London Stock Exchange. TRIG completed its IPO in 2013 raising £300m and is now a member of the FTSE-250 index.

 

Press release date: 6th October 2021