Real estate investor and fund manager Cromwell Property Group (ASX:CMW) (Cromwell or Group) will transition to its first ever green loan this month, as part of the organisation’s new Sustainable Finance Framework – developed in consultation with the Commonwealth Bank of Australia and French-based multinational financial services company Societe Generale.
The inaugural transaction under the new Sustainable Finance Framework will involve transitioning the existing $130 million bilateral loan with Commonwealth Bank of Australia – on the Cromwell Riverpark Trust – to a green loan certified by the Climate Bonds Initiative. The debt facility for the Cromwell Riverpark Trust has been extended for a further two years, with all other terms remaining the same.
Cromwell’s Head of ESG Lara Young said a huge team effort, and considerable work, had been put into establishing the Sustainable Finance Framework and securing this type of loan for the Cromwell Riverpark Trust, which is underpinned by Brisbane’s Energex House.
“The Climate Bonds Low Carbon Buildings Criteria was designed with an ambition of a zero-carbon future in 2050. Obtaining this type of loan requires issuers, like Cromwell, to embed transformative steps, not incremental improvements, for rapid decarbonisation. Only the top 15% most emissions efficient buildings in a city can qualify for green loans certified by the Climate Bonds Initiative,” said Ms. Young.
“Energex House is an industry leading Green Star 6 star, and 6-star NABERS Energy rated, building. By extending the term of the facility for a further two years under a green loan, we will continue to improve its sustainability performance.”
Ms. Young said that Cromwell’s Sustainable Finance Framework will further optimise the Group’s borrowing practices through the use of sustainable debt instruments, including green bonds and loans – as well as sustainability linked bonds and loans.
“Cromwell’s Sustainable Finance Framework will support the Group’s commitment to fund low-carbon, efficient and resilient buildings that meet our ESG ambitions,” said Ms. Young.
“By leveraging green or sustainability linked debt, 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 for 2035.”
The new framework was developed following in-depth consultation with issuers and financial institutions to ensure that a best practice methodology could be deployed.
Ms. Young said Cromwell would continue to refine its Sustainable Finance Framework over the next few years, in line with the evolving sustainable finance market and the latest legislation, standards and best practices.
Commonwealth Bank of Australia General Manager Corporate Finance and ESG, Jane Thomson, said sustainable finance was a rapidly growing market.
“We have partnered with many high-profile clients through their first sustainable finance transactions, and we’re thrilled to support Cromwell to develop a framework that reflects their business objectives and sustainability strategy,” Ms. Thomson said.
“One of our priorities is to play a leading role in supporting Australia’s transition to a modern, resilient, and sustainable economy, and key to that is supporting high quality green buildings in the commercial property sector.
There are enormous benefits for an organisation in accessing the vibrant sustainable finance markets and we are pleased to have supported Cromwell’s inaugural green loan under the new framework for the Energex House asset.”
Tessa Dann, Head of Sustainable Finance for Australia & New Zealand at Societe Generale, said,
“as a global bank with strong focus on supporting the transition to a more sustainable economy, we are pleased to have worked as a sustainability coordinator for Cromwell Property Group to develop a Sustainable Finance Framework with a global perspective that reflects Cromwell’s presence across 14 countries.”
“During the development phase, the sustainability coordinators undertook a review of market practices across jurisdictions. The process also required collaboration between offshore and domestic stakeholders within Cromwell.”
“The Sustainable Finance Framework adds another dimension to Cromwell’s sustainability strategy by enabling all Cromwell funds and related entities to utilise the Framework by aligning debt funding needs with sustainability outcomes.”