OPINION: We do not mind being held to account.
Pāmu, also known as Landcorp, is New Zealand’s biggest farming business. It will borrow $85m from Westpac NZ over three years. To incentivise continued improvement in sustainability performance, Pāmu will receive a pricing discount from Westpac NZ if it meets material and ambitious performance targets and pay higher interest costs if it fails to reach them.
It is the first Sustainability-Linked loan in the agricultural sector to include a 1.5 degree Science-Based emissions reduction target that will be validated against global best practice.
Pāmu has a nationwide portfolio of 114 farms that produce milk, beef, lamb, wool, venison, wood and other natural products to both large processors and niche markets globally. Pāmu’s general manager sustainability and farming systems Lisa Martin says farming sustainably is a core part of Pāmu’s business approach.
“We work hard to farm in a way that enhances and enriches the natural environment and land we farm, and both sustainability and innovation are key to ensuring ‘future fit’ farming systems,” Martin says.
“This leading Sustainability-Linked Loan is another step on our journey of constant improvement in the stewardship across our farm. It provides a real incentive for the business to continue to build on the farm performance plans we already have in place across our farm network and provides stretch goals across the perspectives of sustainability, environmental, people and animal welfare.”
Pāmu chief executive Steven Carden says Pāmu has a leadership role to play in the sector.
“We are really pleased to be part of the most comprehensive Sustainability-Linked Loan in New Zealand to date. We see it as another way we can use our size, scale and diversity to lead an initiative like this for the agriculture sector.
“We anticipate that these sorts of sustainability metrics will become standard for most commercial lending in the future, so our partnership with Westpac is about building capability to regularly measure and report on the progress we make improving our sustainability performance.”
The loan’s incentive-based pricing is aimed at encouraging Pāmu’s farmers to improve all aspects of farm sustainability. It outlines annual milestones to reduce all scopes of greenhouse gas emissions across the entire value chain of the business.
By embedding Toitū Envirocare’s new Farm Certification program across the life of the loan, Pāmu farms will be able to credibly measure, manage, verify and reduce their greenhouse gas emissions.
The loan encourages Pāmu to roll out a comprehensive “Sustainable Farms Performance Program” across Pāmu farms. This will help inform integrated farm plan priorities and complement and support workstreams across key areas such as animal health, welfare and nutrition; environment, as well as people, culture and community, climate change adaptation & mitigation.
The deal also includes a commitment to year-on-year improvements in health, wellbeing and safety performance, and delivery of targeted mental health initiatives for Pāmu’s on-farm teams.
Westpac NZ Head of Sustainable Finance Joanna Silver says this loan sets an important benchmark for Sustainability-Linked Loans.
“By having an independently validated target aligning to the Paris Agreement and committing to reductions that cover all scopes of emissions, Pāmu is really raising the bar on climate ambition in the agricultural sector,” Ms Silver says.
“Kiwi farmers and growers have a big part to play in supporting Aotearoa’s transition to a resilient, net zero economy for the benefit of everyone. On-farm sustainability is key for New Zealand as we look to the future, and helping our rural communities look after their wellbeing is really important, so we’re pleased Pāmu have committed to broader sustainability targets and providing mental health training for all Pāmu farm managers.
“Sustainability-Linked Loans are a great example of like-minded organisations working together on projects that will deliver real benefits for their people, customers, our environment and our communities.
“As a major lender with a target of enabling $10bn of sustainable finance by 2025, we were delighted to work on this broad structure with Pāmu and we look forward to helping more organisations achieve their ambitious sustainability performance targets across their business.”
Westpac and Pāmu also thanked EY for providing assurance services over the targets in the loan to ensure it meets the international principles and standards.