Building on Xylem’s green finance evolution
WATER
As part of Xylem’s commitment to advancing sustainability, we are adopting innovative green finance practices, which place sustainability further at the core of how our company creates economic and social value. In our most recent green finance development, Goldman Sachs Transaction Banking Services has launched a new ESG (Environmental, Social and Governance) linked demand deposit account, with Xylem as its anchor client. Here, Sandy Rowland, Xylem’s Chief Financial Officer, shares her perspective on this initiative and Xylem’s broader green finance agenda. What exactly is an ESG-linked demand deposit account? This new Goldman Sachs Transaction Banking (TxB) is a first-of-its-kind product that links the yield or amount of interest that Xylem earns on our deposits to performance against our company’s ESG targets. This means that as we make progress against our sustainability strategies, we stand to earn higher returns on our deposits with Goldman. This strongly aligns with our view at Xylem that sustainability should be at the heart of both our business strategy and our financing approach. Our business is innovating in technologies that deliver more sustainable outcomes for our customers and other stakeholders. Banking products that recognize and reward ESG achievement are a welcome step forward in managing financing and sustainability interdependently. This account does that while delivering the flexibility we need to manage liquidity and payments. How did the Goldman product come about? This was a cross-functional effort led jointly by our Treasury and Sustainability teams including our Treasurer and our VP of Sustainability. The process began with open idea generation sessions, about what something like this might
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Pipes, Pumps and Valves Africa - Jan/Feb 2022
look like, and how it would work. Ultimately, working across the ESG groups in both Xylem and Goldman, we agreed on company-specific metrics aligned to our 2025 Sustainability Goals, and on the mechanism that will deliver a pricing benefit when we achieve our annual metrics. The ESG-linked deposit account builds on Xylem’s suite of green financing tools. Talk to us about the other tools in the toolbox. As a company dedicated to solving water, we see a unique opportunity – and responsibility – to show leadership on sustainability. This latest tool builds on several green finance initiatives by Xylem to more closely align our business and sustainability strategies. We started a few years ago, with a first-of-its-kind credit revolver – a category of financing where the price of borrowing was linked to our sustainability performance. Then, in 2020, we were the first US industrial company to issue a $1 billion portfolio green bond, the proceeds of which were allocated to projects that improve water security and advance sustainability. The bond both expanded liquidity at attractive rates and provided funding capacity for green projects that are important to our customers, employees, shareholders and communities. Now, the deposit account is another way of linking our sustainability and finance strategies. We’re really pleased that, like our previous green financing initiatives, this work with Goldman on the deposit account is a first of its kind. And once again, we’ve got great partners willing to
