NATIONAL Australia Bank has led the development of a landmark loan for Port of Newcastle that aligns financing for Australia’s largest east coast seaport with long-term environmentally and socially responsible outcomes.
The arrangement includes A$515m in sustainability-linked loans that incentivises Port of Newcastle by offering a lower margin on debt if it hits targets across a range of social and environmental metrics.
The port says this is the first sustainability-linked financing by an Australian seaport and the first such loan in Australia to include a modern slavery assessment metric addressing all of the borrower’s suppliers.
The other four metrics focus on emissions reduction, mental health first aid, diversity and inclusion and achieving certified recognition against the NSW Government Sustainability Advantage Scheme.
Port of Newcastle CEO Craig Carmody said, “NAB is helping Port of Newcastle through financial innovation. This will in turn help create a more diverse and sustainable port in the future, supporting opportunities for jobs and economic growth in the Hunter region.
“Our thinking must be in decades, not months or years. That means building new economic opportunities for Newcastle. What is good for the port is also good for the economy.”
NAB group executive – corporate and institutional banking David Gall said the bank was focused on being a partner with its customers, helping to adapt and improve the sustainability of their businesses through innovation and expertise in domestic and global markets.
“This sustainability-linked loan is an important step for the path Port of Newcastle is taking to be an even safer and more environmentally and socially responsible business,” Mr Gall said.
“Behaviour-based lending provides an opportunity to help our customers create greater environmental and social impact in sectors not easily diversified.”
The sustainability-linked loan was part of a broader A$666m refinancing facility for Port of Newcastle funded by a consortium of lenders.
It included A$595m in 2.5-year and 5-year funding and up to A$50m in new green lending that will fund growth initiatives aimed at green building projects and diversifying the port’s revenue base.
Globally, this is the first sustainability-linked loan to align with the International Capital Market Association’s Climate Transition Finance Handbook.
Port of Newcastle will have the opportunity to earn a margin reduction over the next five years on the sustainability-linked loans if it hit targets across a range of social and environmental metrics, including:
1. To keep Scope 1 and 2 GHG emissions below the 2025 trajectory level based on Port of Newcastle’s Well Below 2-degree scenario.
2. 100% of all existing and new suppliers active during the relevant calendar year screened for modern slavery risk and demonstrated engagement where medium or high risk is identified.
3. Establish an Aboriginal and Torres Strait Islander student internship program with The University of Newcastle.
4. Achieve accreditation of a number of mental health first aiders in each company department.
5. Demonstrated progression under the NSW Government Sustainability Advantage Recognition Scheme.