Newcastle becomes first Australian port with sustainability loan
The concept of sustainability finance has developed as a way to incent organizations on better terms if they meet predefined environmental performance targets. Several shipping companies, including Odjfell, Hapag-Lloyd and U-Ming, recently completed sustainability finance, and now in a first for Australia, the Port of Newcastle has become the first Australian seaport to complete funding. comprising a range of social and environmental measures. .
The Port of Newcastle, which is the largest port on Australia’s east coast, has sought environmentally and socially reasonable projects to improve its prospects for the future. Newcastle is Australia’s largest coal port, but in recent years it has sought to diversify its cargoes which also include fertilizers, cement, steel, wheat and other grains, liquid containers in bulk, machinery and alumina.
Like most ports around the world, it is under increasing pressure to improve its environmental performance and reduce its impact on surrounding communities. Reuters reports that in 2020 the Australian and New Zealand banking group, which has declared its intention to stop lending to companies involved in the coal trade, refused to participate in a refinancing of the port’s debt.
The National Australia Bank (NAB) led the development of the loan package which includes A $ 515 million ($ 398 million) in sustainability-linked loans that incent the Port of Newcastle by offering a margin on debt over low if it achieves objectives across a range of and environmental parameters. The elements are accepted by the lender and the borrower and validated before financing with the establishment of specific measurable objectives to judge performance against the objectives.
“Behavior-driven lending offers an opportunity to help our clients create greater environmental and social impact in industries that are difficult to diversify,” said David Gall, Group Director of NAB – Corporate & Institutional Banking. “This sustainability loan is an important step on the Port of Newcastle’s path to becoming an even safer, more environmentally and socially responsible business.”
The conditions for sustainability funding define five specific criteria to measure the port’s long-term environmental and socially responsible performance. This is the first sustainability loan in Australia to include a modern slavery valuation measure for all borrower suppliers, as well as measures focused on emissions reduction, first aid in mental health, diversity and inclusion, and obtaining certified recognition under the NSW Government Sustainability Advantage program. .
Another component of the global funding includes up to A $ 50 million ($ 39 million) in new green loans. These funds are intended for growth initiatives aimed at green building projects and the diversification of the port’s revenue base.
Newcastle Port CEO Craig Carmody said the loan has enabled the port to align its funding with long-term environmentally and socially responsible projects. The frameworks established for this package also position the Port of Newcastle for further sustainable debt issuance in the future.