Bank of China contributes to a $450 million AUD syndicated sustainability-linked loan to Macquarie University for refinancing purposes

Project narrative

In July 2023, a syndicate of four banks — the Bank of China (BOC), Australia and New Zealand Banking Group (ANZ), Commonwealth Bank of Australia (CBA), and HSBC Bank — entered into a $450 million AUD ($300.4 million USD) syndicated sustainability-linked loan (SLL) agreement with Macquarie University — an Australian public research university located in Sydney, New South Wales — for refinancing purposes. This loan consisted of a $100 million AUD tranche with a maturity period of three years and a $350 million AUD tranche with a maturity period of five years. The proceeds were to be used by the borrower to refinance its existing bank facilities. BOC, CBA, and ANZ served as sustainability coordinators. As a SLL, the loan featured six Key Performance Indicators (KPIs) to assess Macquarie University's progress on sustainability, with an accompanying margin increase or decrease depending on whether Macquarie met its KPIs. If Macquarie met all six KPIs, it would generate over $500,000 AUD in savings over the life of the loan; Macquarie made a unique commitment to reinvest all these potential savings into support for scholarships for disadvantaged students. The loan aligned the Asia-Pacific Loan Market Association’s Sustainability Linked Loan Principles (SLLPs). The six KPIs were: scope one and scope two emissions, specifically a 14% absolute reduction in scope-one emissions by 2028 from a 2022 baseline and the reduction of scope two emissions to zero by 2024 and holding of it at zero thereafter; scope three emissions, namely the measurement and setting of a reduction target of scope three emissions by 2026; the restoration of habitat including the endangered Turpentine-Ironbark Forest, specifically the increase the high and very high integirty forst area by more than 25% by 2028 and three of more partnerships that embedded the restoration programme in course materials and Professional and Community Engagement (PACE) units by 2027; Manawari Aboriginal cultural safety and online United Nations Sustainable Development Goals (SDGs), specifically the completion of Manawari Aboriginal training by 80% of graduating students annually between 2025 and 2028 and new staff annually between 2024 to 2028; gender equality, specifically, alignment with 40:40 Vision by 2030 in senior academic levels (professor and associate professor) in aggregate and the increase of gender diversity in academic recruitment (shortlists at all levels) in line with 40:40 Vision by 2030; Junior Science Academy (JSA) programmes for underrepresented groups, specifically expanding the deaf and hard of hearing program to 72 enrollments annually by 2027, the expansion of the science, technology, engineering, and mathematics (STEM) program for girls and women to 90 enrollments annually by 2027, and the establishment of blind and visually impaired program and growth to 24 enrollments annually by 2027. This loan made Macquarie one of the first universities in Australia to adopt an SLL. The biodiversity KPI was only the second of its kind in Australia and was focused on restoring the critically endangered Turpentine-Ironbark Forest on campus, home to native birds. The transparency of the KPIs was noted as unusual in this SLL, as traditionally borrowers do not publish KPIs to avoid reputational risk if they fail to meet them. The number of KPIs in this loan was also observed be unusually high.