Industry super fund owned funds manager, IFM Investors, has entered into a $200 million fixed-rate, environmental, social and governance (ESG) term deposit with the Commonwealth Bank.
Certified by the Responsible Investment Association Australasia (RIAA), which sets Australian and New Zealand ESG standards, the term deposit will fund loans designed to drive sustainable outcomes – the first of its kind for the Australian market.
IFM Investors, treasury services portfolio manager, Helen Tu said: “We see this type of financing playing an important role in supporting significant assets across the community become more sustainable”.
“We are delighted to partner with CBA and we particularly welcome their commitment to provide us with regular updates on the progress of initiatives being funded through the sustainability-linked loans (SLLs).”
Commonwealth Bank’s ESG term deposit would enable institutional clients to manage their cash while providing the bank with an alternative source of funding to finance SLLs.
Like a traditional term deposit, investors would receive a fixed rate of return for the investment term, however, the bank would exclusively allocate the proceeds of these deposits toward the growing portfolio of SLLs.
Commonwealth Bank institutional banking and market group executive, Andrew Hinchliff, said: “The financial system has a critical role to play in supporting Australia’s decarbonisation journey by directing capital to projects and assets that will drive our transition to a more sustainable future”.
“We are proud to partner with IFM Investors on this ESG [term deposit] which provides $200 million in additional capital for us to lend to initiatives driving positive ESG outcomes.”