LSE secures £175 million funding for green and social projects

Securing this funding is a historic moment for LSE and a milestone on our journey to achieve our ambition to be the leading social science institution
- Minouche Shafik, LSE Director

The London School of Economics and Political Science (LSE) has secured a £175 million Sustainable Private Placement for green and social projects at the School, including the development of a new building, the Firoz Lalji Global Hub at 35 Lincoln’s Inn Fields (35 LIF)

A new landmark site overlooking Lincoln’s Inn Fields Park in central London, the Firoz Lalji Global Hub will include adaptable spaces for teaching, research and conferences. And with sustainability, energy efficiency and carbon minimisation at the core of its design, it is set to be LSE’s first Net Zero Carbon building.

The new space will be a continuation of LSE’s already sector-leading sustainability work and design, which meets best in class sustainability and energy efficiency standards including the Saw Swee Hock Student Centre (2014, BREEAM Outstanding), the Centre Building (2019, BREEAM Excellent) and the Marshall Building (2021, BREEAM Excellent).

Commenting on the funding, LSE’s Director Minouche Shafik said:Securing this funding is a historic moment for LSE and a milestone on our journey to achieve our ambition to be the leading social science institution with the greatest global impact.”

LSE was able to secure the funding for the new development through the issue of its inaugural Sustainable Private Placement. This transaction was supported by banking partner NatWest.

LSE worked with NatWest to develop a Sustainable Finance Framework placing sustainability at the heart of the School’s  financing strategy. This Framework demonstrates the university’s alignment with relevant international green and social bond and loan Principles and highlights its ongoing commitment to tackling the climate crisis.

S&P Global Ratings issued a Second Party Opinion confirming that the Framework aligns with the relevant international Principles and in some areas exceeds the core recommendations. In addition, the Framework contributes to several UN Sustainable Development Goals including climate action, quality education and reduced inequalities.

The establishment of the Sustainable Finance Framework ties LSE’s social purpose and Sustainability Strategic Plan with the School’s funding and financial strategies. It will give LSE the flexibility to issue financial instruments to support its commitment to achieving a broad range of sustainability outcomes.

The launch of LSE’s private placement attracted strong interest from long term UK and US investors and received bids over four and a half times the launch amount. This allowed the School to secure long term borrowing on advantageous terms.

LSE’s Chief Finance Officer Mike Ferguson said: The overwhelming level of interest from investors in the School’s Sustainable Private Placement reflects both the financial strength of the School and its positive long term prospects in the higher education sector.”

This announcement follows recent news that LSE is the first carbon neutral verified university in the UK for all its measured emissions thanks to ongoing work by the School to reduce its carbon footprint and mitigate its residual emissions by supporting carbon reduction projects.

LSE’s direct emissions have reduced by 44 per cent since 2005, despite an increase in campus size and student numbers.

Head of Sustainability at LSE, Charles Joly added: LSE’s Sustainable Finance Framework is a testament to the School’s success in embedding sustainability across its activities, and its commitment to continue investing in environmental and social projects in years to come.”

Sonia Gadhia, Director, Private Placements at NatWest, said: “LSE’s strong focus on sustainability was an important factor for investors and contributed to the very strong demand, with investors willing to lend up to 50 years.”

Gustavo Brianza, Head of ESG and Debt Advisory, NatWest, said: “The Framework underlines the pivotal role universities play in helping to solve some of societies’ key environmental and social challenges, as well as managing their own environmental footprint.”

Behind the article

LSE was supported in the transaction by NatWest who acted as sole Private Placement Agent and sole Environmental, Social and Governance (ESG) Structuring Bank.

LSE worked with NatWest to develop a Sustainable Finance Framework. The Framework demonstrates the university’s alignment with applicable ICMA and LMA Principles. These are a collection of voluntary frameworks designed to promote the role of global debt capital markets in financing environmental and social sustainability goals.

The Framework intends to contribute toward the following UN Sustainable Development Goals - sustainable cities & communities (SDG 11), climate action (SDG 13), affordable and clean energy (SDG 7), clean water and sanitation (SDG 6), quality education (SDG 4), and reduced inequalities (SDG 10).