First sustainability linked loan for Agriculture designated for CBA customer

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Leading beef producer Stockyard wanted something different from its funding partner and found just that with a loan with reduced interest

Stockyard exports premium grain-fed Wagyu and Angus beef to over 20 international markets while maintaining a 20,000 head feedlot that also supplies the domestic market

Stockyard Group is a successful premium Queensland beef producer and thought it was time its lending partner recognised this fact when it applied for extra funding. It ended up with a specially tailored loan though to be the first of its kind in agriculture.

If the Stockland Group met the agreed emissions and animal welfare targets set by CBA, the interest rate on the loan would be reduced as a reward.

As a result, Stockyard Group has entered into a sustainability-linked loan (SLL) three-year loan with Commonwealth Bank, that recognised improvements they are making for a lower finance rate, a first for our local agriculture industry

The SLL loan that Stockyard has entered into could be the fore-runner to ensure that all farming enterprises embrace a farm plan that takes sustainable outcomes in emissions reduction, animal welfare and people wellbeing. In return for a reduced interest rate.

In the case of this first SLL loan, the Bank has set out clear parameters that will see Stockyard stretching significantly beyond its existing, strong baseline where further all-round improvements can be made.

Stockyard already has a strong alignment to the beef industry’s priorities such as the Australian Beef Sustainability Framework and the Carbon Neutral 2030 strategy.

In addition to meeting those criteria this bank funding adds extra tiers to the facility for Stockland to meet, including five metrics, grouped into three sustainability performance targets.

These include, reducing Scope 1 and 2 greenhouse gas emissions, improving animal welfare outcomes and additional workplace health and safety innovations.

Managing Director of Stockyard, Lachie Hart said CBA’s SLL loan structure incorporates their strong commitment to continuously strive for even better care of their animals, the environment, the community, and their people.

Lachie Hart, Stockyard Managing director and CBA’s Andrew Quinn have devised a sustainability-linked loan that offers a lower interest rate as a bonus to meeting emissions reductions and improved animal welfare

“We have welcomed the opportunity to participate in this innovative financing structure and make a commitment to tie important sustainability targets to our financing costs.

“To us, as a third-generation family business, it is our responsibility to pass on a viable, responsible, and sustainable business for future generations and this loan will allow us to utilise interest savings to ensure this is the case.

“It also provides opportunities to access internationally recognisable ESG credentials to assist with securing capital and customers in the future,” Mr Hart said.

Commonwealth Bank’s Group Executive for business banking, Mike Vacy-Lyle, said this landmark transaction will be a game changer for the business and demonstrates the bank’s ability to develop innovative finance solutions to support the sustainability of the industry through improved ESG outcomes.

“We know many farmers across the country are already adopting best practice sustainability and environmental stewardship, and we want to partner with agribusinesses to help them innovate and accelerate transition plans,” Mr Vacy-Lyle said.

Stockland’s Beef empire

Australia’s beef industry accounts for almost a quarter of the country’s total agriculture production. Stockyard has been recognised through numerous awards for their branded beef.

The company is already an industry leader in emissions reduction and animal welfare. Stockyard’s primary asset is its – 20,000 head feedlot located in the highly productive Darling Downs region of south-east Queensland.

Founded in 1958, Stockyard is recognised as an integrated pastoral, lot feeding and branded beef business, exporting a suite of premium grain-fed Wagyu and Angus beef product to over 20 international markets while supporting Australian markets. Further information on Stockyard’s environment and sustainability strategy is available online here.