Allens helps convert debt facility to $400m sustainability-linked loan

Allens has helped ensure the success of a transaction it said sets a benchmark in a nascent market.

The top-tier firm advised Wesfarmers on converting an existing debt facility into a $400m sustainability-linked loan agreement with the Commonwealth Bank of Australia.

Two environmental and social governance (ESG) goals are linked to the loan, the firm said.

The Allens team included partner Ben Farnsworth and senior associate Rod Aldus, who said that the firm has a “strong relationship” with Wesfarmers and that the deal “sets a new benchmark” for Australia’s growing sustainable finance market.

“The rewards from lenders for sound corporate ESG policies makes this form of debt financing very attractive and we expect demand for such products to continue to increase,” Aldus said.

Farnsworth said that the loan is fairly new in Australia.

“This $400m, three-year loan is linked to two ESG outcomes from Wesfarmers – significantly reducing their carbon emissions and setting new Indigenous employment targets. The introduction of the social capital component is a novel feature which goes beyond the traditional environmental outcomes which are a staple of such loans,” he said.

The deal adds to Allens’ work on sustainability-linked financing transactions. That includes advising on the $1.4bn ESG-linked loan.