New sustainable finance framework announced

Date: 17.10.2022Source: Fonterra

As part of Fonterra’s commitment to sustainability and implementation of its strategy, the Co-operative has today released its Sustainable Finance Framework (Framework). This Framework aligns Fonterra’s funding strategy with its sustainability ambitions and reflects the evolving preferences of lenders and debt investors in this area.

Fonterra’s Framework outlines how the Co-operative intends to issue and manage any sustainable debt, which could include Green Bonds and Sustainability-Linked Bonds and Loans. The Framework has been developed with Joint Sustainability Co-ordinators HSBC and Westpac NZ and has been independently verified by ISS Corporate Solutions confirming alignment with globally agreed sustainable finance principles.

Said Simon Till, Director Capital Markets, Fonterra: “This new Framework is a step on our sustainable financing journey – aligning with our Co-operative’s broader sustainability ambitions.

“Over the next decade we intend to significantly increase our investment in sustainability-related activities and assets throughout our supply chain to both mitigate environmental risks and continue to differentiate our New Zealand milk. By FY30 we intend to invest around NZ$1 billion in reducing carbon emissions and improving water efficiency and treatment at our manufacturing sites. In doing so, we will be taking significant steps towards our aspiration to be Net Zero by 2050 and we plan to align our funding with this approach.”

The Framework, the opinion issued by ISS Corporate Solutions and a presentation to update debt investors are on our website at this link. This announcement comes off the back of strong annual sustainability performance reported in September 2022.

Added Fraser Whineray, Chief Operating Officer, Fonterra:  “In our sixth year of independently assured reporting, we are pleased with progress. Fonterra’s GHG emissions (Scope 1&2) are 11.2% lower than FY18 and well on their way to our goal of 30% by 2030.  With our supplier owners, we are ahead of target for delivery of Farm Environment Plans (FEP), with 71% of farmers now having plans, against a target of 67% for FY22 and on track for 100% by 2025.”

This year Fonterra has also seen close to double the number of farmers achieving the Co-operative Difference to last year, with more than 70% achieving it at some level. From the 2021/22 season, farms became eligible for The Co-operative Difference payment of up to 10 cents per kg for milk solids, based on meeting specific criteria, covering milk quality and an on-farm demonstration of care for the environment, animals, people and community.

The Co-operative is also working with partners and other stakeholders on a wide range of potential solutions to help reduce biological emissions.  Fonterra, along with other Agribusiness leaders, recently entered into a joint venture with the Government, as part of the new Centre for Climate Action on Agricultural Emissions. Under the MOU, industry partners have already made an indicative commitment up to around $35 million. This could see around $172 million invested over the next four years to develop and commercialise practical tools and technologies for farmers.

Concluded Whineray: “Over the next four years we’re looking to scale up an investment in methane reduction of around $50 million through this Joint Venture. We know we can, with the Government, achieve more by partnering with others and are looking forward to working together to find solutions that will benefit our farmer owners along with the rest of New Zealand.”  For more visit Fonterra Sustainability Report

David Cox / IDM

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