Stockyard Group’s new deal with Commonwealth Bank will see it pay lower interest if it hits emissions and safety targets
They say virtue is its own reward, but for Queensland beef producer Stockyard Group, meeting targets in emissions, worker safety and animal welfare could payoff in the monetary sense.
The company has entered into a sustainability-linked loan (SLL) with the Commonwealth Bank, with the bank to charge lower interest if certain metrics are met, in what both groups are saying is a first for Australia’s agriculture industry.
While details of the three-year loan have not been released, CBA says the arrangements set out clear parameters that will see SLL stretch towards sustainable outcomes “significantly beyond its existing, strong baseline performance.”
“The deal ties the facility pricing to five metrics, grouped into three sustainability performance targets, including: reducing Scope 1 and 2 greenhouse gas emissions; improved animal welfare outcomes; and workplace health and safety innovations,” CBA says.
CBA group executive for business banking Mike Vacy-Lyle says the deal demonstrates its ability to develop innovative finance solutions.
“We know many farmers across the country are already adopting best practice sustainability and environmental stewardship, and we want to partner with agribusinesses to help them innovate and accelerate transition plans,” he says.
The bank signed its first sustainability loan earlier this year with Celsus, the commercial (non-clinical) operator of Royal Adelaide Hospital.
Stockyard managing director Lachie Hart said CBA’s new loan structure incorporates Stockyard’s commitment to doing better for their people, animals, environment and community.
“We have welcomed the opportunity to participate in this innovative financing structure and make a commitment to tie important sustainability targets to our financing costs,” he says.
“To us, as a third-generation family business, it is our responsibility to pass on a viable, responsible, and sustainable business for future generations and this loan will allow us to utilise interest savings to ensure this is the case.”
“It also provides opportunities to access internationally recognisable ESG credentials to assist with securing capital and customers in the future,” Hart says.