London-listed energy and engineering giant Wood has secured a £430m government-backed green transition loan - the first of its kind in the fight against climate change. Firms operating in the UK's "industrial heartlands", like Aberdeen-headquartered Wood, will be backed by the government in its bid for net-zero emissions by 2050, the government said in a statement.
The firm's shares dipped 0.59 percent to 237p per share following the announcement.
UK Export Finance (UKEF) will offer Wood an 80 percent Transition Export Development Guarantee (EDG) as part of the loan agreement, which helps companies transitioning out of fossil fuel exports.
The new Transition EDG was launched ahead of COP26, which the UK is set to host in Glasgow, as part of the UK's pivot away from climate-harming emissions.
"Green trade presents a major economic opportunity for Britain that will drive high-value jobs in every part of the nation," international trade secretary Liz Truss said.
The cash is set to go towards low carbon investments, research and development in more climate-conscious growth sectors and support clean growth projects globally.
Under the agreement, Wood will commit to expanding its green portfolio and "significantly reducing" its greenhouse gas emissions over the next five years, the government added.
Related: Visualizing The Gradual Death Of EU Coal Production
Wood, which pulls in nearly £400m from its exports per year, has made a string of sustainable pledges, including making all its offices single-use plastic-free by 2025.
The business giant has, since 2019, been working on its transition towards cleaner energies - with its chief executive Robin Watson explaining that the momentum behind the energy transition is "unstoppable".
"We are already well advanced with our own transition, deliberately broadening our portfolio across energy and supporting our clients to achieve their own carbon reduction goals," Watson said.
"UKEF's support will allow us to accelerate this journey and capitalise on the many opportunities emerging as we build the low-carbon energy systems of the future."
The loan facility was jointly coordinated by Citi and BNP Paribas, with Citi acting as the facility agent while Rothschild & Co acted as Wood's advisors.
By City AM
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Comments
London-listed energy and engineering company Wood has secured a £430m government-backed green transition loan against a string of sustainable pledges, including making all its offices single-use plastic-free by 2025.
If loans can be easily secured by merely giving pledges that might or might not be fulfilled, then there will be a rush of companies applying for loans.
And yet, the UK government recently announced that it will invest billions of pounds on expanding oil exploration and production in the North Sea despite its commitment to net-zero emissions by 2050. What a hypocrisy?
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London