Genesis Energy will be required to meet ambitious carbon emission reduction targets if it’s to avoid penalties under a Sustainability-Linked Loan agreed with Westpac New Zealand.
The $100m loan financially incentivises Genesis to meet sustainability targets, which include reductions across all scopes of emissions, ramping up renewable energy generation, and a future of work programme. Genesis will pay a lower interest rate on the loan for achieving its goals but will have to pay higher interest if it falls short of its commitments.
Genesis CEO Marc England announced the new loan in the week of the 2021 United Nations Climate Change Conference, also known as COP26, which is taking place in Glasgow.
He says the company is proud to help New Zealand achieve its low carbon goals by reducing its carbon footprint, developing more renewable energy and looking after its young people.
“We know the responsibility we have as the country transitions to a low carbon future. We are committed to targets of removing more than 1.2m tonnes of carbon annually by 2025, from a 2020 base year, and reducing generation emissions by 36%.
“Through this loan, we have set annual greenhouse gas emission targets for every year of the loan in line with our emission reduction goals. Our goals align with the Paris Agreement to limit global warming to 1.5°C and have been verified by the internationally recognised Science Based Targets initiative.
“As part of this deal, we also have annual targets to encourage us to deliver on our commitment to sign contracts for 2,650 GWh of new renewable energy generation to be built by December 2030.
“It’s important that we focus on the big picture as we look to the future, which is why we’ve also included a social target on preparing rangatahi in our power schemes’ local communities for the future of work through apprenticeships, internships and funding for our Ngā Ara Partnership Programmes.”
Today, Genesis also released its Sustainable Finance Framework, and becomes the first company in New Zealand to have a Framework, loan and bond aligned to the Climate Transition Finance Handbook.
“This effectively means that Genesis has done everything possible to demonstrate that its climate transition strategy addresses material climate-related risks, and is appropriately disclosed and science-based, contributing to the goals of the Paris Agreement,” Mr England says.
Westpac NZ Head of Sustainable Finance Joanna Silver praised Genesis for its climate goals and leadership ambition and for being willing to be held to account on important commitments.
“By working together with companies like Genesis to encourage innovation through their finance arrangements, we’re helping them achieve their ambitious sustainability goals with really meaningful incentives,” Ms Silver says.
“We encourage more corporates in Aotearoa to think about how a loan linked to their sustainability goals could transform their business, align their values with those of their customers and communities, and make a positive impact on New Zealand’s carbon footprint and future.”
Westpac NZ aims to support Aotearoa’s transition to a resilient, net zero economy for the benefit of all New Zealanders and has made a commitment to facilitate $10bn in sustainable finance by 2025.
Westpac and Genesis also thanked EY for providing assurance services over the targets in the loan to ensure it meets the international principles and standards.
