The Co-op has unveiled ambitious new sustainability targets linked to the 2023 amendment and extension of its £442 million Revolving Credit Facility. The new targets align with our commitment to achieve Net Zero status across all our operations by 2035 and across our entire business by 2040, and follows our achievement of hitting our original greenhouse gas target early ahead of the 2025 goal.
As announced at the FY results in April 2024, the Co-op has considerably enhanced the financial strength of the business, with notable improvements in Net Debt and cash generation. While the Co-op’s Revolving Credit Facility is undrawn at present, it provides a backstop liquidity and working capital management facility important for our future vision and growth strategy ambition. The new sustainability targets underscore our continued commitment to integrating sustainability into our financial strategy.
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.
These targets include reducing carbon emissions across its supply chains, continuing to reduce operational food waste, and more than doubling its annual contributions to the Co-op Levy Share, a collaborative fund with other employers that supports thousands of apprenticeships.
As a starting base, around 37% of the Co-op’s Scope 3 emissions were covered by suppliers adhering to the Science Based Targets initiative. As part of the new targets linked to this facility, the Co-op is working with its supply chain to increase that figure to 50% by the end of 2024 and to 67% by the end of 2025. Efforts to support suppliers in achieving this include building cross-sector partnerships, disseminating clear sustainability guidance to suppliers, working with farmers and growers to reduce emissions from primary production, and embedding sustainability goals into contracts and joint business plans, among other initiatives.
The Co-op has already committed to halving food waste generated by its stores and depots by 2030, aligning with the WRAP (Waste and Resources Action Programme) best practices. As part of this lending commitment, the Co-op aims to reduce almost 650 tonnes of food waste per year over the life of the sustainability-linked loan. This endeavour involves thorough assessments of operations, fostering essential partnerships to tackle food waste, and promoting awareness among our customers about the issue of food waste.
Furthermore, the Co-op is intensifying its support for creating apprenticeship opportunities for young people through its Co-op Levy Share initiative. Since its launch in 2021, the initiative has raised over £23 million in pledges from 80 different organisations, supporting more than 2,000 apprenticeships to date. With £5.1 million pledged between January and October last year, the Co-op now targets £9 million and £10 million pledged to the Levy Share in 2024 and 2025, respectively.
Rachel Izzard, CFO at Co-op, said: “Our underlying financial strength has enabled us to support our members, our colleagues and their communities. 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.”
