Sainsbury’s has taken out a “first of its kind” corporate loan structured purely to invest in carbon reduction and sustainability projects.

The supermarket has agreed a £200m ‘green loan’ with Lloyds Bank and Rabobank to fund clean energy generation, energy efficiency and water saving projects over the next two to three years.

While green bonds are increasingly widespread, Sainsbury’s said the creation of a conventional corporate loan underpinned by environmental commitments was a market first.

Sainsbury’s CFO John Rogers said: “This green loan is the first of its kind in the UK and demonstrates our leadership in carbon reduction and sustainability, and shows the value we attach to environmental improvements.”

The loan is structured to comply with the Green Bond Principles 2014 - guidelines developed by bond underwriters and environmental groups to provide a framework for the growing asset class.

The use of the loan will be independently measured and monitored by a third party and Sainsbury’s will publish progress on its green investments and carbon emission savings online.