COFCO International links sustainability performance to new USD 2.1 billion credit facility
COFCO International announced today the signing of an agreement with a consortium of 20 banks for a USD 2.1 billion sustainability-linked loan as the company’s core financing facility. It is the largest sustainability-linked loan for a commodity trader.
GENEVA, Switzerland – COFCO International announced today the signing of an agreement with a consortium of 20 banks for a USD 2.1 billion sustainability-linked loan as the company’s core financing facility. It is the largest sustainability-linked loan for a commodity trader.
The facility’s margins are linked to the company’s sustainability performance. Targets include:
- Year-on-year improvement of environmental, social and corporate governance (ESG) performance, assessed by Sustainalytics, a leading provider of ESG research and ratings, and;
- Increasing traceability of agri-commodities, with a focus on directly sourced soy in Brazil, assessed by an independent inspector annually.
Traceability to origin is a prerequisite to building more sustainable supply chains. This is in line with COFCO International’s ambition to meet the world’s increasing demand for food in a responsible way.
If the company meets the agreed targets, the related margin savings will be invested to further improve performance across sustainable supply, health and safety, environment, communities and upholding standards.
“As a rapidly-growing international agri-business, meeting rising demand for food in a sustainable way is key to our purpose,” said Johnny Chi, Chairman of COFCO International. “As outlined by Lyu Jun, Chairman of COFCO Corporation, in an article published as part of the World Economic Forum 2019 Annual Meeting, businesses, governments, civil society, producers and consumers all have a shared responsibility when it comes to meeting the UN Sustainable Development Goals for food security and sustainable production. With our main financing now linked to sustainability performance we fully commit ourselves to further driving sustainability into our operations and supply chains.”
“We are proud to have built this sustainable financing partnership with many of the largest international and Chinese banks,” said Jing Wu, CFO at COFCO International. “We hope to further leverage these relationships and together develop new innovative financing to incentivise sustainable agriculture.”
ING, BBVA and Rabobank acted as sustainability coordinators. ABN AMRO has acted as coordinator and facility agent.
Leonie Schreve, Global Head of Sustainable Finance at ING, said: “We believe sustainable business is better business and actively support our clients in their sustainable transition to combat climate change through financing. I am proud to welcome our first Chinese sustainability-linked loan client, and I hope many more will follow.”
Jorge Gonzalez Jacob, Global Head of Corporate Lending at BBVA, said: “We are delighted to have been able to help COFCO International design its first sustainability-linked facility, and to continue to actively contribute to the Asian expansion of the sustainable loan market.”
Jan van Nieuwenhuizen, Member of the Managing Board at Rabobank, said: “We use our knowledge, networks and financial solutions to support our clients to improve the environmental and social sustainability of the food and agricultural sector. By incorporating sustainability KPIs into its core financing instrument, COFCO International is showcasing its commitment towards a higher level of transparency in some of the vulnerable agricultural value chains it is involved in. We are very proud to have aligned our vision to drive sustainable agriculture and to have worked closely with COFCO International as a sustainability coordinator.”
Rutger van Nouhuijs, CEO Corporate & Institutional Banking at ABN AMRO said: “in our long-standing relationship with COFCO we are proud to be acting again as coordinator and be part of this sector transforming financing”.
This credit facility will refinance existing term and revolving credit facilities maturing later this year. It comprises three tranches: a 1-year revolving credit facility (RCF), a 3-year RCF and a 3-year term loan. It is based on Loan Market Association Sustainability Linked Loan Principles.