Treasury Wine Estates has announced that it will engage Sustainability Linked Loans as a means of connecting financial and sustainability performance.

Sustainability Linked Loans (SSLs) provide accountability for the delivery of Treasury Wine Estates’ (TWE) sustainability ambitions. SSLs incentivise the borrower to perform well against Sustainability Performance Targets (SPTs) –  as a favourable performance will invoke a loan margin reduction, while underperformance will lead to an increase.

Kirsten Gray, TWE’s Chief Sustainability and External Affairs Officer, said: “We have a responsibility to be a leader in sustainability and recognise it is fundamental to our long term success.

“This approach is embedded in our strategy and the establishment of the sustainability linked loans is another important step towards integrating our sustainability agenda across the business.”

TWE will be assessed against several of its disclosed sustainability targets, including: 100 per cent renewable electricity usage by 2024; a reduction in greenhouse gas emissions; a comprehensive review of water usage and footprint; 50 per cent women in senior leadership, and a 42 per cent female workforce in general by 2025.

TWE are the first Australian wine company to use SLLs, engaging the services of BNP Paribas, HSBC, and Westpac as ‘Sustainability Coordinators’, to ensure that the SLLs meet market expectations.

TWE’s CFO, Matt Young, said: “Integrating our sustainability performance with our financing framework is a really important step for both our sustainability and capital market journeys, incentivising us to move even more quickly towards achieving our sustainability ambitions and targets.”

Gray concurs, believing that the SLLs are a crucial device in keeping TWE accountable to its sustainability targets: “Setting sustainability targets is important but to truly make a difference we need to embed sustainability across the entire business.

“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.”

TWE have also recently launched a global domestic and family violence policy, joined the RE100 renewable energy initiative and helped to found the Sustainable Wine Roundtable.

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