Financial services provider Standard Bank has partnered with retailer Woolworths to execute the bank’s first sustainability-linked transactional deposit structure in South Africa.

The transactional deposit structure links the interest Woolworths earns on its deposits to the achievement of environmental, social and governance (ESG) targets.

The key performance indicators and sustainability performance targets agreed between Woolworths and Standard Bank cover both Woolworths’ Food and Fashion, Beauty and Home (FBH) businesses, with a focus on increasing local sourcing of FBH products, reducing electricity use in corporate stores and continuing sustainability attributes in food products.

Standard Bank global transaction manager for the consumer sector Tania Troskie says that, following the success of signing up Woolworths as the bank’s first ESG-linked funding partner late in 2021, being first to market yet again in the conclusion of another milestone deal is an honour.

The deal marks a significant step in the sustainability journeys of both companies.

Woolworths group CEO Roy Bagattini says the company has already linked more than 80% of its drawn debt to specific sustainability attributes and is pleased to have now linked the other side of the balance sheet – deposits – to these criteria as well.

“The conclusion of another benchmark sustainability-linked financing deal is not only testament to our commitment to making a meaningful difference for the greater good of the planet and its people, but the importance of collaborating with others in this cause for good,” he adds.

Over the past year, Standard Bank has also partnered with Woolworths to successfully initiate several ESG-linked deals, including a R1.15-billion loan and a R600-million working capital facility – both of which are linked to the retailer’s sustainability targets.

“For Woolworths, Standard Bank has taken a holistic approach through our proposal for overlaying the ESG benefits in terms of deposits, in addition to the working capital funding that already exists.

“We recognise and acknowledge Woolworths for their continuous drive towards responsible corporate governance. Standard Bank is, therefore, providing Woolworths with preferential deposit interest rates for meeting agreed upon sustainability performance targets,” concludes Standard Bank transactional products and services head Justin Dhunraj.