American fossil-fuel suppliers are moving to tie their bank credit lines to sustainability goals, including slashing their carbon footprint.

DCP Midstream LP, which operates natural gas pipelines, revealed Tuesday that interest and fees paid on its $1.4 billion revolving credit facility with banks such as Mizuho Financial Group and JPMorgan Chase & Co. are now linked to the company's progress toward reaching its emission-reduction targets. The borrowing conditions are also determined by DCP's safety performance relative to rivals, the company said in a statement.

U.S. loans with terms tied to environmental, social, and governance (ESG) targets have become increasingly popular amid growing investor appetite for sustainability themes, with transactions topping $137 billion last year, according to Bloomberg data. But America's oil and gas industry still accounts for a tiny fraction of it. Before DCP, only liquefied natural gas (LNG) exporter Cheniere Energy Inc. and oil driller Occidental Petroleum Corp. had announced loan agreements featuring ESG clauses.

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