co-op sign

Source: Co-op

The retailer first adopted a sustainability-linked financing facility in 2019

The Co-op has set new sustainability and social targets linked to its £442m Revolving Credit Facility.

It aims to reduce carbon emissions across the supply chain, with two-thirds of suppliers enrolled in the Science Based Targets initiative by end of 2025, from a base line of 37%.

Efforts to support suppliers in achieving this include building cross-sector partnerships and embedding sustainability goals into contracts and joint business plans, Co-op said.

The convenience retailer is also targeting a reduction of circa 650 tonnes of food waste per year across its stores and depots during the sustainability-linked loan, having already comitted to halving food waste by 2030.

Finally, it is looking to double the annual funding to Co-op Levy Share – a collaborative fund with other employers that supports thousands of apprenticeships.

The new targets align with its commitment to achieve Net Zero status across operations by 2035 and across the entire business by 2040.

As revealed in Co-op’s full year results in April 2024, Co-op moved back into operating profit, up 17% to £66m, having seen a loss of £12m in 2022.

Ongoing progress in strengthening the balance sheet resulted in a further reduction in net debt to £82m – a decrease of £240m year on year – highlighting the “financial strength of the business”.

While the Co-op’s Revolving Credit Facility is undrawn at present, the retailer said it provides a backstop liquidity and working capital management facility that was “important for our future vision and growth strategy ambition”.

Co-op’s sustainability-linked Revolving Credit Facility is supported by Lloyds Bank, Barclays, NatWest, ING Bank, Handelsbanken and Bank of Ireland, all of whom participate as lenders. Lloyds Bank led the structure and coordination of the sustainability-linked facility, and advised the Co-op in achieving all lender agreement to the challenging new sustainability metrics.

“Our underlying financial strength has enabled us to support our members, our colleagues and their communities” said Co-op CFO Rachel Izzard.

“These new targets reflect our commitment to the issues which matter most to our member-owners, including environmental stewardship and the reduction of carbon emissions and food waste across our business and supply chains.

“This also marks a further step forward towards our goal of achieving Net Zero across our operations by 2035. The banks supporting Co-op share our commitment to these important areas, and their backing will go a long way to facilitating the implementation and achievement of our plans.”

Aled Patchett, head of retail and consumer goods at Lloyds Bank, added: “As a consumer-owned co-operative, the Co-op ensures its business is run with its members, colleagues, communities, and planet at the heart of all decisions. We take pride in supporting the Group in taking swift action in several important areas, demonstrating its leadership in this domain and reinforcing its commitment to meeting its targets comprehensively.”