A recent example is ANZ New Zealand’s partnership with Kathmandu Holdings Limited to establish a syndicated A$100 million sustainability-linked loan (SLL) facility, the largest syndicated SLL in the New Zealand market. ANZ acted as joint arranger and sustainability coordinator for the transaction.
A sustainability-linked loan commits a borrower to deliver key environmental, social and/or governance (ESG) targets. The borrowing costs under the facility are adjusted up or down depending on the performance of the borrower to deliver against predetermined sustainability targets.
Kathmandu’s SLL will be measured against a reduction in its greenhouse gas emissions, B Corp certification, and improving the transparency, wellbeing and labour conditions for workers in its supply chain.
We believe this is another important step in the evolution and acceptance of sustainable lending in New Zealand. Increasingly, shareholders and stakeholders want to see a commitment to sustainability, and this is reflected in the growth of this type of lending.
Since 2017 ANZ has acted as Sustainability Coordinator and/or Joint Lead Manager on 23 transactions totalling over NZ $2.4 billion.
We recognise that for sustainable finance to become the mainstream it must have the confidence of everyone – issuers, investors and all stakeholders.
That’s why we are excited and proud to be a founding partner of the newly established Aotearoa Circle Centre for Sustainable Finance, alongside the other major banks.
The initiative will focus on 11 key recommendations to achieve a sustainable finance system.
These include more education and training around sustainable finance, working closely with public and private sector leaders, and improving data collection and reporting.
We hope initiatives like this will help to encourage the development of more uniform standards and reporting within the sector. This should in turn help develop greater public understanding and confidence.
Sustainable finance is moving into the mainstream. But the ultimate goal is still ahead – for the financial system to deliver positive environmental and social impact and financial inclusion for all.
This article first appeared in NZ Herald.