The big bank has agreed to provide a sustainability-linked loan to a Queensland beef producer in a ‘first’ for the farming industry.
Stockyard Group has entered into a three-year Sustainability Linked Loan (SLL) with the Commonwealth Bank of Australia (CBA) for an undisclosed amount.
As part of the new financing agreement between the CBA and the beef producer, the loan stipulated clear parameters that would see Stockyard aiming for sustainable results in emissions reductions, animal welfare and human wellbeing. that would extend beyond its existing baseline performance.
The agreement ties facility pricing to five metrics grouped into three sustainability performance goals, including:
- Reduce greenhouse gas emissions from scopes 1 and 2;
- Improved animal welfare outcomes; and
- Innovations in occupational health and safety.
The loan structure will save Stockyard on its loan costs if it meets these five criteria in all three key performance areas.
If they regress in any of these parameters, its penalty costs will be donated by the ABC to a project that will improve environmental, social and governance (ESG) outcomes in the industry.
Cost savings from the loan will be directly invested in projects that would allow Stockyard to meet ongoing lending targets, as well as meet the targets set by the organization’s 2030 Carbon Neutral Strategy.
Commenting on the SLL deal, Mike Vacy-Lyle, CBA Group Director for Corporate Banking, said the transaction would be a game-changer for the business and demonstrated the bank’s ability to develop financing solutions to support industry sustainability through improved ESG. results.
“We know that many farmers across the country are already adopting best practices in sustainability and environmental stewardship, and we want to partner with agribusinesses to help them innovate and accelerate transition plans.” , said Mr. Vacy-Lyle.
Stockyard chief executive Lachie Hart said the new loan structure reflected the group’s commitment to prioritizing ESG initiatives.
“We welcomed the opportunity to participate in this innovative financing structure and commit to linking important sustainability goals to our financing costs,” he said.
“For us, as a third generation family business, it is our responsibility to pass on a viable, responsible and sustainable business to future generations, and this loan will allow us to use interest savings to ensure that this is the case.”
He also spoke of the opportunities the loan would provide the organization, saying, “The loan provides our company with the ability to access internationally recognized ESG credentials to help secure capital and customers in the future.”
Stockyard was founded in 1958 and its main asset is around 20,000 feedlots located in the Darling Downs region of South East Queensland. It exports a range of premium grain-fed wagyu and angus beef products to over 20 international markets while supporting Australian markets.
According to Stockyard, it is the first and only brand of beef to be accredited by a set of international standards for the sustainable management of agriculture and livestock, which incorporates its low-stress livestock handling, its regenerative farming practices, its certified organic composted manure program and rigorous occupational health. and safety program.
Earlier this year, the ABC launched a Green Loan Program to enable new and existing customers with an eligible ABC home or investment loan to purchase and install small-scale renewable technologies. eligible scale such as solar panels, batteries and electric vehicle charging stations to the property used as collateral for existing home loans.
[Related: CBA writes $150m sustainability loan]
Malavika Santhebennur is the Mortgage Headlines Editor at Momentum Media.
Prior to joining the team in 2019, Malavika held roles at Money Management and Benchmark Media. She has been writing about financial services for six years.