Improvement Incentive business loans make companies more future-proof

Small changes can make a big impact. When one of ABN AMRO’s clients conducted a recent energy assessment and discovered that employees were leaving machines on overnight to avoid long start-up times the next morning, they saw an easy way to cut energy use. “By automating machine start times early in the morning, they ended up saving a lot on energy,” explains Mascha Boender, Sustainability Product Manager at ABN AMRO. “With this particular client, we had agreed an energy savings target to qualify them for an interest rate reduction on their loan.”

Future-proof

Success stories like this are exactly why ABN AMRO has launched its new Improvement Incentive business loan programme, says Bas Bewier, Sustainable Real Estate Expert at ABN AMRO: “We want to help business owners make their operations more future-proof by defining a specific sustainability goal with them.” Improvement incentives can be defined when a client takes out an ABN AMRO business loan. If they hit the agreed target within the time frame, they earn an interest rate reduction. Eligible loans range from € 250,000 to € 10 million.

Energy savings as a first step

“We agree specific targets with our clients that are tailored to the challenges currently facing their sector,” says Mascha. “Together we look at which improvement step best suits the business.” For many businesses, reducing energy consumption is a fast and easy way to ensure their operations are more future-proof. It cuts carbon emissions and shields them against rising energy costs in the future.

“Simple steps like turning down the thermostat or using air conditioning more efficiently often require minimal investment, yet deliver substantial savings,” Bas says. “Making their fleet more sustainable is also a goal that appeals to many companies. Especially in sectors like logistics, businesses are keen to add more electric vehicles to their fleets.”

Certification

To qualify for a reduced interest rate on the loan, businesses must make tangible and concrete improvements, Mascha explains. “We always try to set targets endorsed by sector labels and certification bodies,” she says. Supermarket operators, for example, might aim to earn the nationally recognised Super Supermarket Label (Super Supermarkt Keurmerk). Mascha adds, “In some cases, businesses may be certified, but can still advance to a higher level of certification.”

Concrete improvements

Bas continues, “There are other generalised targets that businesses in nearly any sector can meet. These include ensuring the circularity of raw materials or earning CO2 Performance Ladder or Social Entrepreneurship Performance Ladder certification. They may even pursue B Corp or CSR Performance Ladder certification to showcase their social responsibility efforts.”

Simplicity at the core

Based on the bank’s long experience in granting Sustainability Linked Loans to its corporate clients, ABN AMRO’s new Improvement Incentive loans target a broad range of businesses, especially SMEs. Mascha says, “There are still relatively few products out there to help these businesses future-proof their operations.”

Bas stresses the fact that the terms of the loan are deliberately simple and to the point: “If the business meets the agreed target, we’re happy and reward them with a lower interest rate. If not, the original rate stands.” The bank also understands that change can take time, so it gives these clients the space they need to achieve their goals. Bas adds, “If the business meets the target within two years, the lower rate applies for the rest of the loan term.”

Finding solutions together

Businesses with an Improvement Incentive loan also gain access to ABN AMRO’s expertise and network. Mascha says, “We’re happy to share our knowledge and put our mind to finding ways to make the improvements they want.”

Both Bas and Mascha say it’s clear that working towards a goal helps these clients discover new insights. Bas says, “When entrepreneurs commit to improving their business, they start to see opportunities everywhere. As a bank, we’re proud to support our business clients on their journey to becoming as future-proof as possible.”