Cromwell Property Group converts $1.2b facility into sustainably linked loan

Cromwell Property Group converts $1.2b facility into sustainably linked loan

Photo: Noah Buscher, via Unsplash

Real estate investor and fund manager Cromwell Property Group (ASX: CMW) has converted a $1.2 billion multi-bank loan facility into a sustainability linked loan that will target the company’s ambitious net-zero and gender pay gap targets.

The loan facility, which comprises eight individual lenders, was developed with the Commonwealth Bank of Australia (ASX: CBA) and Société Générale, which together have assumed the roles of sustainability co-ordinators.

The Brisbane-based Cromwell has a $2.6 billion Australian investment portfolio and total assets under management of $11.5 billion across Australia, New Zealand and Europe.

However, the group is about to exit its European operations with the $457 million sale announced today of its European fund management platform and interests, including the Cromwell Italy Urban Logistics Fund and Cromwell European REIT, to Swiss investment group Stoneweg.

Cromwell’s group head of ESG Lara Young says the new sustainability linked loan creates an opportunity to highlight the business’s focus on “several critical topics” as part of its broader environmental, sustainability, and governance policy.

“As part of our ESG report release in January, Cromwell announced our full Scope 3 emissions inventory for the first time, becoming one of the few Australian commercial property organisations to publish an emissions footprint across 100 per cent of our global network and supply chain,” says Young.

“Building on that announcement, we have been working with tenants and suppliers across all our upstream and downstream business activities – covering our entire supply chain of tenant activities; funds under management; joint ventures; and embodied carbon sources – to stretch our net zero approach beyond our operational control.

“The progression we have made in this space has allowed us to set our most ambitious target to date, as part of this new sustainability linked loan – to reduce scope 3 greenhouse gas emissions intensity to equal, or less than, 30.16 (kilograms of carbon dioxide equivalent per square metre) by 2028.

“This is equal to eliminating more than 4.4 million kilograms of carbon dioxide equivalent – or emissions from 784 households – by 2028, against the 2023 baseline.”

Cromwell says this can be achieved via a multi-pronged approach including encouraging tenants to switch to renewable electricity and providing tenant support through waste stream signage and education in order to reduce their landfill waste and contamination.

“Importantly, by leveraging sustainability linked debt at the same time as meeting important social milestones, Cromwell Property Group can move significantly closer to meeting our current and future ESG responsibilities, including a Cromwell portfolio Net Zero Scope 1 and 2 target by 2035,” says Young.

Cromwell is also seeking to reduce its gender pay gap to a maximum of 12 per cent by 2028, building on the company’s existing diversity commitments which include maintaining pay parity across all roles and maintaining 40:40:20 gender targets across all leadership levels within the organisation.

The company says the new loan facility is aligned with both the Asia Pacific Loan Market Association Green Loan Principles, as well as its Sustainability Linked Loan Principles.

“We’re really proud to support Cromwell Property Group on its sustainability journey and commitment to high-quality, energy efficient buildings that will continue to benefit Australians for years to come,” says CBA’s Jon Coombes.

“The portfolio of assets already met the high standards for a green loan, yet Cromwell’s desire to set even more ambitious environmental targets within the loan structure demonstrates their leadership, and recognises that the journey to net-zero is a continuous one,” he says.

“This innovative green sustainability linked loan is a great example of making ambitious commitments towards to a more sustainable future and an example of how sustainable finance products can be used to not only support, but drive sustainable outcomes.”

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