Commonwealth Bank of Australia has raised more than $1.5 billion in funding through its Environmental, Social and Governance Term Deposit product.
The ESG TD enables institutional depositors to align their cash management strategies with their sustainability goals.
Launched in December 2021, ESG TD provides institutional depositors with the opportunity to finance CBA’s portfolio of sustainability-linked loans (SLLs), which incentivise companies to achieve improved ESG outcomes.
Following the success of the Australian dollar-denominated product, the ESG TD program is being expanded to offer deposits denominated in foreign currencies including US dollars and Euros.
CBA group executive, institutional banking and markets Andrew Hinchliff (pictured) said ESG TDs provided another source of funding for Australia’s transition to a more sustainable economy.
“Access to institutional capital is critical for Australia’s transition to a more sustainable future,” Hinchliff said.
“We’re proud that our innovative sustainable finance products are helping connect pools of capital to support the work of organisations transitioning their operations to be more sustainable.”
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Hinchliff said CBA had experienced exceptional inflows for the ESG TD product in just six months.
“This demonstrates the strong appetite among our clients to support Australia’s sustainability journey,” he said. “It has created a significant new source of funding for our SLLs portfolio, extending our ability to finance new opportunities for clients.”
Like a traditional term deposit, ESG TDs offer depositors a fixed rate of return with a commitment from CBA to exclusively allocate the proceeds of these deposits toward the bank’s growing portfolio of SLLs.
CBA’s executive general manager, global markets Chris McLachlan said the new foreign currency capability expanded the appeal of CBA’s ESG TDs to international customers managing multi-currency portfolios.
“We are committed to continued innovation in sustainable finance and playing a leading role in financing Australia’s transition to a low carbon economy,” McLachlan said.
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CBA’s institutional sales managing director Anthony Kritikides said the success of the ESG term deposit was driven by organic growth.
“We’ve had strong client engagement on this product across a wide suite of market participants from super funds, asset managers and local councils, to more recently corporate clients seeking meaningful ESG cash management solutions,” Kritikides said.
“We are proud to offer another avenue for clients to support Australia’s transition.”
