The major bank has announced that it will provide $150 million of debt funding to Queensland Airports Ltd (QAL) for the Gold Coast Airport redevelopment.
Of the $150 million, $75 million forms a sustainability-linked loan (SLL), which provides a margin reduction for QAL should the airport meet targets of lowering “carbon emissions intensity”. Likewise, the SLL states that an inability to meet targets will result in an increase in pricing.
According to CBA, the SLL is “the first in Australia to be directly linked to a reduction in carbon emissions”.
It is hoped that, by being tied to the borrower’s ESG (environmental, social and governance) rating, this will incentivise the operator of Gold Coast Airport to reduce their carbon emissions during an upcoming redevelopment.
Amelia Evans, the chief financial officer for QAL, emphasised the usefulness of ESG-linked loans for businesses. “[It] reinforces the need for us to achieve our internal carbon emissions targets, delivering both financial and environmental benefits to QAL and our shareholders,” Ms Evans said.
CBA’s group executive of institutional banking and markets, Andrew Hinchliff, added that he believes demand for these types of products will continue to grow, as borrowers become increasingly aware of their environmental impact.
“The world is changing rapidly, and it’s imperative that we are always looking for innovative solutions to help our clients navigate this change,” Mr Hinchliff said.
“This is a landmark transaction for QAL and for ourselves, and we are delighted to build on our 14-year relationship with QAL to bring this deal to market.”
“Commonwealth Bank is committed to playing our part in limiting climate change to below two degrees, and this includes supporting our customers’ efforts to reduce their own carbon emissions,” he added.
The announcement comes off the back of CBA’s “green mortgage” scheme, unveiled in May this year by CEO Matt Comyn.
In an effort to reward “energy-efficient” mortgage customers, the scheme offers $500 cashbacks to mortgage-holders who have solar panels installed in their homes.
CBA also made progress in reducing its own emissions in November 2018, reportedly becoming the first Australian company to commit to sourcing 100 percent of its electricity through renewables by 2030.
[Related: CBA unveils new ‘green mortgage’ scheme]
Hannah Dowling is a journalist for mortgage business, the leading source of news, opinion and strategy for professionals working in the mortgage industry.
Prior to joining the team at Mortgage Business, Hannah worked as a content producer for a podcast catering to property investors. She also spent 6 years working in the real estate sector at a local agency.
Hannah graduated from Macquarie University with a Bachelor of Media and Journalism.