Pact Group’s Sustainability-Linked Loan a first for Australian Manufacturers
12 September 2022
Pact Group has converted $420 million of existing loan facilities into Sustainability Linked Loans (SLLs), in what is a first for an Australian-based manufacturing company. 
Pact Chief Financial Officer Paul Washer said sustainability is a major consideration in all the company’s business decisions and converting a substantial portion of existing loans to SLLs demonstrates Pact’s commitment to its people and the environment.
“Sustainability underpins our overall vision to lead the circular economy and shapes our corporate strategy and day-to-day business decisions,” Mr Washer said.
Under the SLL arrangement, Pact will receive loan margin benefits if annual sustainability performance targets are achieved, and a margin penalty if it underperforms. The sustainability performance targets are:
- An increase in the percentage of recycled content across Pact’s packaging portfolio.
- Increasing the amount of recycled material processed and distributed to the external market.
- Reducing scope 1 and 2 greenhouse gas emissions.
- Reducing the gender pay gap.
The packaging target aligns with Pact’s 2025 End of Waste Promise to eliminate all non-recyclable packaging and offer 30% average recycled content across Pact’s plastic packaging portfolio, which is the equivalent of diverting nearly two billion plastic containers from landfill.
To achieve this, Pact is investing $76 million to install new technology and equipment at its packaging manufacturing facilities around Australia to have the capability to increase the recycled content in products including milk bottles, food packaging, mobile garbage bins and industrial packaging.
Pact and its joint venture partners are also investing in a network of plastic recycling facilities. Pact currently operates seven plastic recycling facilities in Australia and New Zealand, including the recently opened Circular Plastics Australia (PET) plastic recycling plant in Albury-Wodonga which can recycle up to 20,000 tonnes of PET a year.
Two more facilities are under construction in Melbourne while another three are in the planning phase. By 2025, Pact plans to have capacity to recycle up to 120,000 tonnes of plastic waste per annum across all 12 facilities.
In July, Pact announced it is establishing a strategic partnership with Woolworths Group that will see approximately 18,000 tonnes of recycled plastic used to manufacture packaging for Woolworths’ own brand range, including milk bottles, meat trays, fruit and vegetable punnets, and beverage bottles.
Pact has recently committed to reducing greenhouse gas emissions by 50% in Australia and New Zealand by 2030 in relation to the emissions produced directly at its recycling and manufacturing facilities, and the indirect emissions from purchasing electricity from the grid to power those facilities.
“Our vision is to lead the circular economy and operate in the most sustainable way possible to look after our people and ensure our products, services and all related activities minimise harm to the environment and consider the needs of future generations,” Mr Washer said.
Westpac Banking Corp, HSBC and Commonwealth Bank of Australia are the lead arrangers and sustainability coordinators for Pact’s SLL facilities. Based on publicly announced transactions in Australia as of 12 September 2022.
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