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Details of G8 Education’s sector first Sustainability Linked Loan revealed in Westpac release
Jason Roberts
Mar 08, 2021
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Westpac has confirmed their role in structuring a $350 million sustainability linked loan facility for G8 Education, a first for the company and also for the early childhood education and care (ECEC) sector.
G8 CEO and Managing Director Gary Carroll said: “G8 is the first childcare provider to execute a Sustainable Linked Loan. Including such a structure into our syndicated loan facilities demonstrates our commitment to safety and quality outcomes for our team, children and families.”
A sustainability linked loan, or SLL, is a loan or bank facility that has embedded within its conditions, known as sustainability performance targets (SPT), which include key performance indicators that are linked to a company’s commitment to engage in practices that are consistent with building a sustainable business model and their sustainability profile.
SLL’s have become an increasingly popular incentive for borrowers that do not directly engage in activities considered “green” or “eco friendly” but still have an interest in progressing sustainable policies that are anchored in alternative outcomes such as societal wellbeing or cultural sustainability.
In the case of G8 their performance targets focus on Quality, as measured by the ratings received as part of the ECEC sector’s Assessment and Rating process, and Team Safety, as measured by their lost time injury frequency rates (LTIFR).
Should G8 be successful in meeting or exceeding the targets within the SLL they will receive a small reduction in the interest rate charged on their loan, and if they fall short of meeting their targets they will see an equivalent small increase in the rate charged.
The incentive structures built into the SLL creates an additional level of commitment and focus for the company to work towards and facilitates a transition to an increasingly sustainable business model and their overall sustainability policy objectives.
To learn more about G8’s sustainability objectives please click here for their Sustainability Policy.
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