In a first for Australian supermarket majors, Coles Group has agreed to link $1.3 billion in debt to its achievement of key sustainability goals, as outlined in their 2021 sustainability strategy.
Coles will see the margin-rate on the four-year Sustainability Linked Loans (SLL) move inline with success in three key outcomes, they are: reducing Scope 1 and Scope 2 emissions, increasing total waste diverted from landfill, and increasing percentage of women in leadership roles.
The agreement will see a direct line drawn between the company’s sustainability outcomes, and its cost of capital.
“Coles believes that sustainable businesses are better businesses, and our Sustainability Linked Loans reflect our commitment to working with all our stakeholders to make positive changes. The SLL incentive structure is linked to our progress against company-wide sustainability goals with delivery of those goals delivering improved cost of capital, and is therefore an effective tool for driving sustainability throughout our business.” says Chief Financial Officer, Leah Weckert.
Sustainability co-ordinators for the transaction were ANZ, BNP Paribas and Rabobank.
“By linking the company’s cost of capital directly to their sustainability commitments, Coles is able to demonstrate how serious it is about its ambition to become Australia’s most sustainable supermarket,” says Tania Smith, Director of Sustainable Finance at ANZ.
Rabobank suggests this is the first of many such deals that link outcomes with funding arrangements.
“Many of our corporate food and agribusiness clients are developing clear ambitions and committing to long-term sustainability targets. Linking sustainability performance to the cost of capital is a way to support those companies that are meeting their ambitious commitments,” said Rabobank Australia CEO, Peter Knoblanche.