Cromwell restructures lending facility

A major commercial real estate investor has converted its $1.2 billion lending facility into a loan tied to emissions reduction and gender pay targets.

Cromwell Property Group's loan, which includes eight lenders, was developed with the Commonwealth Bank. Global financial services firm Societe Generale acted as sustainability coordinator.

The loan is aligned with the Asia Pacific Loan Market Association's (APLMA) green loan principles and sustainability-linked loan principles.

It is tied to a Scope 1 (direct) and 2 (indirect) emissions reduction target of net zero by 2035, and a Scope 3 (supply chain) emissions reduction target of net zero by 2045.

It is also linked to a target of reducing Cromwell's gender pay gap to a maximum of 12% by 2028.

Nationally, the median total remuneration gender pay gap of base salary plus benefits is 19%.

The loan is "innovative" and "such transactions are rare in the sustainable finance market", Societe Generale head of sustainable finance for Australia and New Zealand Tessa Dann said.

Cromwell's asset portfolio already met the standards for a green loan, CBA general manager major client group Jon Coombes said, but the real estate investor's commitment to setting more ambitious targets within the loan structure "recognises that the journey to net zero is a continuous one".

"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."

Cromwell Group head of ESG Lara Young said the new sustainability-linked loan formed part of its broader environmental, sustainability, and corporate governance (ESG) policy.

"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 (kgCO2e/m2) by 2028.

"This is equal to eliminating more than 4.4 million kilograms of carbon dioxide equivalent (KgCO2e) - or emissions from 784 households - by 2028, against the 2023 baseline."

To achieve its goal, the property investor will encourage tenants to switch to renewables, and to reduce waste it will provide tenant support through waste stream signage and education.

The gender pay target forms part of Cromwell's broader diversity commitments including 40:40:20 gender targets across all leadership levels.