Wesfarmers ESG-incentivised $400m loan

Allens has advised Wesfarmers Limited (Wesfarmers) on converting an existing debt facility into a $400 million sustainability-linked loan agreement with Commonwealth Bank of Australia.

The debt facility is linked to Wesfarmers’ progress on two internal Environmental and Social Governance (ESG) targets – to reduce carbon emissions in its chemical operations and ambitious targets for Indigenous employment.

Senior Associate Rod Aldus said that the deal showed the potential benefits ESG-linked loans could bring to Australian corporates.

‘We were delighted to continue our strong relationship with Wesfarmers and advise on a deal that sets a new benchmark for Australia’s burgeoning sustainable finance market. The rewards from lenders for sound corporate ESG policies makes this form of debt financing very attractive and we expect demand for such products to continue to increase,’ said Rod.

Partner Ben Farnsworth added that the loan was one of the first of its kind in Australia.

‘This $400 million, three-year loan is linked to two ESG outcomes from Wesfarmers – significantly reducing their carbon emissions and setting new Indigenous employment targets. The introduction of the social capital component is a novel feature which goes beyond the traditional environmental outcomes which are a staple of such loans,’ said Ben.

The deal adds to Allens’ expertise navigating the new and growing market for green and sustainable financing products, including Sydney Airport’s $1.4 billion sustainability-linked loan.

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