CBA writes 'sustainable' loan for agri business

Stockyard Group has entered into a three-year sustainability-linked loan (SLL) with the Commonwealth Bank of Australia (CBA) for an undisclosed amount.

Under the new funding agreement between CBA and the beef producer, the loan has stipulated clear parameters that would see Stockyard aim towards sustainable outcomes in emissions reduction, animal welfare and people wellbeing that would stretch beyond its existing 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.

The loan structure will provide Stockyard with savings on their loan costs if they meet these five metrics across the three key performance areas.

If they regress in any of these metrics, its penalty costs will be donated by CBA to a project that will improve environment, social and governance (ESG) outcomes in the industry.

The cost savings achieved through the loan will be directly invested into projects that would allow Stockyard to meet the ongoing loan targets, as well as achieve targets set by the organisation’s carbon neutral 2030 strategy.

Commenting on the SLL deal, CBA group executive for business banking Mike Vacy-Lyle said the transaction would be a “game changer” for the business, and has demonstrated the bank’s ability to develop finance solutions to support the sustainability of the industry through improved ESG outcomes.

“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,” Mr Vacy-Lyle said.

Stockyard managing director Lachie Hart said the new loan structure has reflected the group’s commitment to prioritise ESG initiatives.

“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 said.

“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.”

He also spoke about the opportunities that the loan would offer the organisation, stating: “The loan provides the chance for our business to access internationally recognisable ESG credentials to assist with securing capital and customers in the future.”

Stockyard was founded in 1958, and its primary asset is around 20,000 head feedlots located in the Darling Downs region of South-East Queensland. It exports a suite 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 beef brand to be accredited with an international set of standards for sustainable agricultural and livestock management, which incorporates its low stress cattle handling, regenerative farm practices, certified organic composted manure program and a rigorous workplace health and safety program.

Earlier this year, CBA launched a green loan program to enable its new and existing customers with an eligible CBA home loan or investment loan to purchase and install eligible small-scale renewable technology such as solar panels, battery packs and electric vehicle charging stations at the property used as security for the existing home loans.

[Related: CBA writes $150m sustainability loan]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.