Global consumers are increasingly making purchases based on their perception of a product’s environmental sustainability.
This is a trend welcomed by New Zealand dairy manufacturing company Synlait Milk, which has a stated purpose of “doing milk differently for a healthier world”.
In 2018, Synlait released bold sustainability targets focused on reducing greenhouse gas emissions, avoiding the use of coal, improving water quality and supporting farmers and local communities.
As part of that commitment, Synlait and ANZ signed New Zealand’s first Sustainability Linked Loan (SLL) tied to Environmental, Social and Governance (ESG) metrics.
The $NZ50 million four-year loan encourages Synlait to further improve its performance against a set of independent ESG criteria.
“For Synlait, linking our financial arrangements to our ESG performance made perfect sense,” Synlait CFO Nigel Greenwood said.
“It reinforces to our shareholders and stakeholders that we are committed to continuously improving our performance and disclosure and aligns with our company purpose.”
The new loan – which refinances an ANZ existing loan – is structured to provide a discount or premium applied to the base lending margin based on third party assessor Sustainalytics’s annual assessment of Synlait’s exposure to financially material ESG risks.
“Synlait’s strong commitment to sustainable business practices made it an ideal candidate for this type of financing” ANZ’s Head of Sustainable Finance Katharine Tapley said.
“We are excited to have partnered with Synlait to secure New Zealand’s first ESG-linked loan as we jointly showcase that ESG initiatives can deliver material financial benefits.”