National Australia Bank (NAB) has led the development of a landmark loan for Port of Newcastle (PON) that aligns financing for Australia’s largest east coast seaport with long-term environmentally and socially responsible outcomes.
The arrangement includes A$515 million 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.
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 this loan had created a way for the port to align its financing with long-term environmentally and socially responsible projects.
“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,” Mr Carmody said.
“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 & 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$666 million refinancing facility for Port of Newcastle funded by a consortium of lenders.
It included A$595 million in 2.5-year and 5-year funding and up to A$50 million in new green lending that will fund growth initiatives aimed at green building projects and diversifying the port’s revenue base.
NAB acted as a core lender in the refinancing and, in its role as Sustainable Finance Structuring Coordinator, assisted in the development of both a sustainability-linked financing framework and green financing framework with Port of Newcastle.
The frameworks position Port of Newcastle for further sustainable debt issuance in the future.
Globally, this is the first sustainability-linked loan to align with the International Capital Market Association’s Climate Transition Finance Handbook.
Five Sustainability Linked Loan Metrics
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.
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
About Port of Newcastle
- Port of Newcastle (PON) is the largest port on the East Coast of Australia, supporting about 9,000 fulltime equivalent jobs nationally
- The port handles 4,400 ship movements, and 164 million tonnes of cargo annually, supporting Australia’s $26 billion trade industry. The port handles a diversity of international trade, including coal, wheat and other grains, fertiliser, steel, cement, bulk liquids, containers, machinery and alumina
- As custodians of the region’s critical asset, Port of Newcastle is diversifying its trade as it strives to create a safe, sustainable and environmentally and socially responsible future
- Port of Newcastle became the first port in Australia and New Zealand to be certified as an EcoPort in January 2020, a global environmental and sustainability standard for the ports sector
- NAB is committed to delivering $70 billion in environmental financing by 2025
- NAB is working closely with 100 of its largest greenhouse gas emitting customers to support them in developing or improving their low carbon transition plans by 2023
- NAB is an inaugural signatory of the United Nations’ (UN) Principles for Responsible Banking, which requires it to implement a program of work over four years encompassing impact and target setting; clients and customers; stakeholders; governance and culture; and transparency and accountability.
- NAB is also the only Australian bank that has signed the United Nations Environment Programme Finance Initiative’s Collective Commitment to Climate Action, working towards aligning business operations and lending portfolios to achieve net zero carbon emissions by 2050