20 May 2019
Airlines are one of the world’s major carbon producers. Airports, however, are not. It may surprise that a business model reliant on aviation doesn’t face the same emissions challenge – but that doesn’t mean the most successful airports ignore carbon pollution.
For Adelaide Airport (AAL), the gateway to South Australia, the motivation to keep track of - and ultimately decrease - their environmental footprint came from shareholders, customers and their bottom line.
"[Consumers expect you to be] a good corporate citizen… and they're rewarding those companies that are doing the right thing,” - Brenton Cox
“If we're not able to look after our environment [and] work with our community constructively… then we're not going to be here in the long term,” says Brenton Cox, General Manager Corporate at Adelaide Airport.
“[Consumers expect you to be] a good corporate citizen… and they're rewarding those companies that are doing the right thing.”
Supported by a relationship spanning decades, ANZ and Adelaide Airport worked together to develop Australia’s first sustainability linked loan (SLL). The loan was grounded on a sustainability rating by independent company Sustainalytics with targets then agreed to by the bank and AAL.
If AAL demonstrates an improvement on these targets and the rating, the cost of the debt is reduced.
“It was certainly a robust discussion around AAL’s sustainability performance on the targets over time which brought the two of us closer,” says ANZ Head of Sustainable Finance, Katharine Tapley. “We viewed that [deal] as a partnership between ANZ and AAL around stewarding more sustainable development.”
Tapley says consumers are becoming more interested and picky about where their goods and services come from, particularly millennials.
“They are a generation significantly more ethically minded than any generation that we've seen before,” she says.
AAL has installed a significant rooftop solar panel system and invested in a storm water runoff trial with SA Water to improve airside greenery - leading to lower temperatures and reduced fuel burn.
“We're certainly looking for the next challenge,” says Cox. “There are little exciting things we can show to demonstrate leadership that helps in our backyard and ends up having a flow on effect.”
Cox says the beauty of the SLL was that it came from a long-term understanding between the bank and the airport: “In many ways that's what sustainability is all about - it's not transactional. It's about a partnership that transcends individuals and transcends a profit moment.”
Sustainability linked loans allow the borrower to use the loan for general corporate purposes, with pricing and potentially other terms tied to improved sustainability performance over time. This style of loan suits a company motivated to link its cost of capital to its sustainability performance.
The SLL structure can be applied across a wide range of sectors including infrastructure, diversified industries, health, education, property, telecommunications, agribusiness and food processing and production.
Personally, I have found partnering with AAL fantastic - they have a strong South Australian focus and they love our community.
Bronwyn Corbet is a Director of Institutional at ANZ
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
20 May 2019
23 May 2019