SOUTH AFRICA – Standard Bank, a financial services firm and retailer Woolworths have successfully concluded the first sustainability-linked working capital facility in South Africa to the value of R600 million (US$41.53m).
The conclusion of the facility is testament to Woolworths’ commitment to achieving bold sustainability targets and realising its vision to be one of the world’s most responsible retailers, the parties say.
This working capital’s facility structure aligns Woolworths’ financing decisions with its commitment to sustainability by providing reduced interest rates based on performance against a combination of sustainability performance targets.
Further, as sustainability-linked funding ties the terms of funding to environmental, social and governance (ESG) outcomes, the facility supports and incentivises responsible corporate behaviour and the creation of shared value.
The financing structure is also strongly aligned to Standard Bank’s social, economic and environmental impact framework.
“This deal is another example of our ongoing commitment to ensuring sustainability is entrenched into the heart of our business, particularly from a working capital perspective, which drives our daily operational requirements,” said Feroz Koor, Group Head of Sustainability at Woolworths.
“We have committed to ensuring that all our debt going forward is ESG-linked where possible. Woolworths now has approximately 60% of our debt in line with our sustainability targets. This is our sustainability strategy in action and demonstrates our intent to making a meaningful difference for the greater good of the planet and its people.”
As the second sustainability-linked deal concluded with Standard Bank, the bank stepped in as the lender and sustainability co-ordinator to support Woolworths’ drive to ensure responsible environmental resource management of key agreed sustainability performance indicators (SPIs).
These included Woolworths food, private-label fashion, beauty, and home goods as well as electricity consumption in corporate stores.
Acting as the primary transactional advisory bank through its Corporate and Investment Banking (CIB) and Transactional Products and Services (TPS) divisions, Standard Bank provided seamless ESG funding solutioning to support the Woolworths journey towards achieving their strategic sustainability objectives.
“This landmark deal is the first of its kind from a TPS SA perspective. As the first ESG sustainability-linked deal, an extensive amount of collaboration from internal stakeholders, such as our legal, credit, and business teams, were required to draft the necessary ESG principles,” explains Justin Dhunraj, Sector Head: Consumer, Transactional Products, and Services at Standard Bank.
Kerry Young, Senior Legal Manager: Transactional Products and Services at Standard Bank, attributes the successful finalisation of this deal, under tight deadlines, to the unwavering dedication and support of all Standard Bank divisions and the client’s solid commitment to this process as well as their clear vision of what they wanted to achieve from it.
“It is always a pleasure working with a committed partnership team to develop a first-to-market financing product and still have fun doing it,” said Alana Shapiro, Group Treasury Manager at Woolworths.
With this pioneering achievement comes the confirmation of Standard Bank’s ability to evolve and exceed new client needs. Not only did the bank’s CIB and TPS divisions negotiate unchartered waters with this deal by crafting its own ESG template, but its innovative solution has potentially pivoted it to the forefront of the industry.
“The negotiation process with Woolworths was a true reflection of our partnership and willingness to meet our clients halfway,” said Tania Troskie, Global Transactional Banker: Transactional Products and Services at Standard Bank.
“Going forward, our aim is to replicate similar ESG agreements with other clients now that we have a strong base to work from.”