Navigator Gas have announced that last month they entered into a facility agreement which includes a sustainability-linked margin adjustment linked to two key performance indicators ("KPIs"). One KPI is linked to fleet environmental criteria and the other is linked to percentage targets for women in leadership roles at Navigator each year, with an initial target of 22% by the end of 2023.

Recently ESG has been a real buzz word in the ship finance industry, with much of the emphasis (understandably) being focused on decarbonisation. It is, therefore, very interesting to see this new loan facility, which has placed emphasis on the "S" and "G" pillars of ESG as well as the "E" pillar.

Whilst gender diversity KPIs have been seen in corporate finance documentation in other industries for a number of years, this is a new development in the shipping market; an industry which has traditionally been male dominated.

Gender diversity KPIs are often either linked to increasing gender balance in management or generally increasing female representation in the workforce as a whole. With the latter approach, there is a concern that female employees could be mostly represented in certain types of roles and/or more junior roles (for example, in the shipping industry, women are more likely to be employed in onshore positions). The criticism sometimes aimed at the former approach is that it could encourage quote-filling.  

Nevertheless, progress has to start somewhere and the fact that both lenders and borrowers are increasingly being asked to consider these types of issues will hopefully lead to gradual change within the industry. Perhaps the next step will be looking at not just gender diversity, but also diversity in terms of, for example, LGBTIQ+, disability and race.