TWE transitions $1.4b to Sustainability Linked Loans

December 16, 2021
By Ioni Doherty

Treasury Wine Estates Ltd (TWE) will transition AUD$1.4 billion of financial loans into Sustainability Linked Loans. It is one of the largest Sustainability Linked Loans in Asia-Pacific, and the first for a wine company in the region.

TWE Chief Sustainability and External Affairs Officer Kirsten Gray (pictured above with TWE’s CFO Matt Young) said the premium winemaker was following through on its commitment to a lower carbon future.

“We’ve set ambitious targets to be powered by 100 per cent renewable electricity by 2024 and reach net zero emissions (scope 1 and 2) by 2030. Transferring a substantial proportion of our existing loans to Sustainability Linked Loans (SLL) provides even further incentive for our teams to progress towards our sustainability goals and cultivate a brighter future for all,” Ms Gray said.

The loans incentivise borrowers to improve their sustainability profile by linking their performance against one or more Sustainability Performance Targets (SPTs) which are agreed upon between the borrower and the financial lender from the outset.

In SLL agreements, the borrower’s performance is aligned to the targets and a favourable performance in meeting those targets results a loan margin reduction. Conversely, underperformance leads to a margin increase.

TWE’s SPTs include:

  • 100 per cent renewable electricity by 2024
  • Reduced greenhouse gas emissions
  • Undertaking a comprehensive review of water usage and footprint at a catchment level in F22 and
  • 50 per cent of women in senior leadership and 42 per cent overall female representation by 2025.

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.

“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,” Ms Gray said.

Other companies who have already transitioned to SLLs including QBE Insurance (US$1.3bn), Charter Hall (A$500m), Downer EDI (A$1.4bn), Lendlease (A$800m) and Coles (A$1.3bn).

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