MANCHESTER: The Co-operative Group Limited (Co-op) has secured a new £350 million ($445 million) five-year lending agreement tied to ambitious sustainability and social impact targets, bolstering its financial position and reinforcing its commitment to ethical business practices.
The deal, announced Thursday, involves six major banking partners: HSBC, Barclays, ING, Lloyds, NatWest and Dutch co-operative bank Rabobank. It reflects strong market confidence in Co-op’s financial resilience and follows a series of positive milestones, including a return to profitability and a credit rating upgrade.
The agreement builds on Co-op’s improved financial performance. In April, the group reported a 35% increase in underlying operating profit and its first profit before tax since 2020. Membership also grew by 22% to 6.2 million, driven by a renewed focus on member-ownership.
Standard & Poor’s upgraded Co-op’s credit rating in late 2024, and the group recently extended its undrawn revolving credit facility. The new funding ensures Co-op is well-capitalized through 2030, covering upcoming bond maturities while securing favorable borrowing rates linked to sustainability goals.
The lending agreement incentivizes progress on environmental, social and governance (ESG) targets, including:
- Achieving Net Zero by 2030
- Ensuring 79% of suppliers align with Science Based Targets initiative (SBTi) standards
- Reducing 650 tonnes of annual food waste
- Enhancing diversity in leadership to reflect UK population demographics
Rachel Izzard, Co-op’s chief financial officer, said the deal underscores the strength of its mutual business model. “By weaving our social value commitments into funding strategies, we invest in our Co-op while holding ourselves accountable to members,” she said.
Francesca Mosca, ING’s head of corporate sector coverage UK, praised Co-op’s sustainability focus, while NatWest’s Naomi Reddington noted the group’s “resilient operating model.” Barclays’ Fiona Parkes linked the deal to the bank’s $1 trillion sustainable financing pledge.
Rabobank, a fellow co-operative, emphasized the significance of the agreement during the UN’s International Year of Co-operatives. “It’s a privilege to support a like-minded organization,” said Renée Marais of Rabobank.
The funding solidifies Co-op’s path toward sustainable growth, balancing financial success with measurable social impact.