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Co-op has secured a £350m loan facility from a syndicate of six major banks, in a deal that ties borrowing rates to environmental and social impact targets.
The lenders include HSBC UK, Barclays, ING, Lloyds, NatWest and Rabobank, a Dutch co-operative bank. NatWest acted as facility agent and mandated lead arranger.
The agreement ties financial terms to sustainability performance, including targets to reach net zero emissions by 2030, reduce food waste by 650 tonnes a year, and ensure 79% of suppliers adopt Science Based Targets initiative (SBTi) guidelines.
It also includes diversity benchmarks based on the UK population, with incentives applied to performance against set targets.
The agreement also includes diversity commitments based on UK population benchmarks, with performance against targets incentivised through borrowing terms.
According to Co-op, the funding would support upcoming bond maturities and help it maintain a well-capitalised position through to 2030. It also follows an improved financial performance and a recent credit rating upgrade from Standard & Poor’s.
In April, Co-op reported a 35% rise in underlying operating profit and returned to pre-tax profitability for the first time since 2020. Membership numbers also increased by 22% over the year, reaching 6.2 million.
Rachel Izzard, chief financial officer, said: “This funding arrangement is a powerful endorsement of strength – the renewed financial strength of our Co-op, the strength of our mutual model and the strength of the shared voice of our members.
“I’m proud to be building on our existing strong relationships with our banking partners, as well as partnering with new lenders, such as HSBC UK and a fellow co-operative in Rabobank for the first time. By weaving our social value commitments into our funding strategies, we’re able to invest in our Co-op while holding ourselves accountable to our members and their priorities. A heartfelt thank you to all our partner banks for making this possible.”
Robert King, UK head of commercial banking sustainability at HSBC UK, added: “This transaction re-affirms the Co-operative Group’s commitment to sustainability.We are proud to be involved in this transaction and to support the Co-op’s journey to becoming a Net Zero business.”
