Macquarie University and CBA have committed to reinvesting savings from the University’s inaugural sustainability-linked loan (SLL) in scholarships for disadvantaged students, in an innovative application of sustainable finance.
Macquarie has become one of the first universities in Australia to establish an SLL, as part of refinancing $450 million of bank facilities. Commonwealth Bank acted as Sustainability Coordinator on this transaction, which aligns to the Asia-Pacific Loan Market Association’s updated 2023 Sustainability Linked Loan Principles, as confirmed by a second party opinion from DNV.
Sustainability-linked loans incentivise sustainability performance through tying financing costs to performance against pre-agreed social and environmental key performance indicators (KPIs). Macquarie’s KPIs include: reducing Scope 1, 2 and 3 emissions, improving biodiversity, Indigenous cultural safety and awareness of UN Sustainability Development Goals, gender equality, and widening participation in Science, Technology, Engineering and Mathematics (STEM) for blind and visually impaired and deaf and hard of hearing children, as well as women and girls.
Deborah Leerhsen, Executive General Manager Global Client Solutions at Commonwealth Bank, commended the University’s continued commitment to driving better social and environmental outcomes.
“Commonwealth Bank is proud to support Macquarie University not only with its first sustainability-linked loan, but also with the commitment to reinvest any savings in scholarships for disadvantaged students. This innovative application of sustainable finance to better serve the communities in which we operate resonates with CBA’s purpose, to build a brighter future for all,” she said.
“Macquarie University is leading the way. The broadness of the scope of the KPIs, which include emissions, social and biodiversity targets, and the materiality of these goals to the University’s operations, show how SLLs can support issuers to achieve their ambitions. Importantly, Macquarie continues to aim higher – demonstrating to the market that a mature sustainability program supports successful execution on strategy,” Leerhsen added.
Vice-Chancellor, Professor S Bruce Dowton, said the SLL is an important addition to Macquarie University’s efforts to make meaningful inroads on the issue of sustainability.
“To have six KPIs in one transaction is a significant achievement and reflects the diversity and sophistication of the University’s commitment to the United Nation’s Sustainable Development Goals,” he said. “The ambitious targets reinforce our work to advance sustainability across our operations, research, curriculum and environment.”
Macquarie’s biodiversity KPI is focused on the continued conservation of the critically endangered Turpentine-Ironbark Forest, 3.5 hectares of which is located on campus. The restoration work aims to provide habitat to native bird species including the powerful owl and the superb fairy wren.
Macquarie University library
The University has worked hard over the last 3 years to reduce Scope 1 and 2 emissions by 90 per cent, which makes its emissions reduction target especially ambitious. The remaining 10 per cent of Scope 1 and 2 emissions are significantly harder and more capital intensive to reduce, but the University has committed to reducing rather than offsetting these emissions while also targeting cuts to its Scope 3 emissions footprint.
Meanwhile, the STEM target aims to significantly expand enrolment capacity at the University’s popular Junior Science Academy (JSA) for underrepresented groups. The Academy, which provides primary school-aged children with the opportunity to explore the world of science, already features a Deaf and Hard of Hearing program, established in collaboration with the Australian Hearing Hub. Under the SLL commitment, this program will be significantly expanded, while a Blind and Visually Impaired Program will be created. The Academy’s mainstream program will also be expanded to support greater participation by girls, to encourage women in STEM.
Charles Davis, Managing Director Sustainable Finance & ESG at CBA, said: “The university sector as a whole is a leader in environmental and social infrastructure design and comprehensive sustainability strategies. The sector also pioneered the adoption of sustainable finance solutions prior to the pandemic.
“Macquarie University was one of the first institutions in the country to issue in Australia’s ESG bond market, and this sustainability-linked loan continues its track record of innovation and commitment to sustainability. As we look to the future, we expect to see an increasing focus from Universities on embedding their ambitious sustainability targets within emerging sustainability borrowing frameworks such as Macquarie University’s inaugural $450m sustainability linked loan,” he said.