Australian wine giant Treasury Wine Estates (TWE) announced that the company has transitioned AUD$1.4 billion (US$1 billion) of financial loans into Sustainability Linked Loans.
This is said to be one of the largest Sustainability Linked Loans in Asia-Pacific and the first for a wine company in the region.
TWE’s latest move echoed COP26‘s spotlight on sustainable finance this year, which highlights new opportunities for lenders, investors and borrowers to support global net-zero emissions. Globally, sustainable debt has surpassed US$3 trillion borrowed for environmental, social and governance purposes, according to BloombergNEF (BNEF).
Sustainability Linked Loans (SLL’s) incentivise borrowers to improve their sustainability profile. The special scheme would link their performance against Sustainability Performance Targets (SPT’s) to adjust the loan margin.
The SPTs are mutually agreed and typically assessed via the borrower’s sustainability strategy, governance focus and internal KPI reporting.
The SLL’s will incentivise TWE to progress towards its sustainability targets at the same time, which includes achieving 100% renewable electricity by 2024; reducing greenhouse gas emissions; undertaking a comprehensive review of water usage and footprint at a catchment level in F22; and achieving 50% women in senior leadership and 42% female representation by 2025.
TWE’s announcement implies its commitment to sustainability, which focuses on building a resilient business, fostering healthy and inclusive communities and producing sustainable wine.
“Setting sustainability targets is important but to truly make a difference we need to embed sustainability across the entire business. Integrating sustainability within our financial framework is a key step to keeping us accountable and building a resilient business for the long-term.” TWE Chief Sustainability and External Affairs Officer Kirsten Gray said.
Other recent initiatives of TWE include launching a global domestic and family violence policy, becoming a founder member of the Sustainable Wine Roundtable, and joining the RE100 global renewable power initiative.
Along with its latest update on SSL’s, the wine giant is poised to lead Australia’s wine industry in promoting sustainability, “We know the Australian wine industry has a carbon neutral future in its sights and we hope that TWE can demonstrate one way that winemakers can build sustainability into their business plans,” Gray said.