NETHERLANDS – Global food processing and agricultural merchant, Louis Dreyfus Company (LDC) has announced the renewal of its US$750 million revolving credit facility (RCF) in North America, linked to the company sustainability efforts.
The loan which replaces the previous three-year RCF will include a sustainability-linked pricing mechanism for the first time.
The RCF interest rate will, therefore, be linked to performance against LDC’s four key performance indicators, which set reductions in CO2 emissions, electricity consumption, water usage and solid waste sent to landfill.
As part of the agreement, there will be an interest rate margin reduction for each year in which LDC makes improvements in its sustainability performance, with an independent auditor providing validation.
“Our position in the food value chain puts us at the heart of some of the world’s most pressing challenges, such as the need to feed a growing world population sustainably,” said Federico Cerisoli, LDC’s Group Chief Financial Officer.
“As a company, we are committed to fair and sustainable value creation, and with this first sustainability linked RCF, today we are linking that commitment to our financing.
“It is also positive that the banking community is increasingly rising to the challenge, through novel financing options.”
The initiative builds on LDC’s sustainability commitments including traceability of agricultural commodities, profiling suppliers, undertaking risk assessments and continuous improvement.
In February, LDC joined the World Business Council for Sustainable Development’s (WBCSD) Soft Commodities Forum (SCF), committing to supporting transparent and traceable soy supply chains in Brazil.
The company which is the “D” of the so-called ABCD group of big agricultural commodity merchants is looking to pursue similar sustainability targets in Asia and Europe, the Middle East and Africa.
“We intend to implement similar sustainability-related targets as our other two RCFs come up for renewal in Asia and EMEA,” added Federico Cerisoli.
Companies are continuously committing to sustainability with sustainability-linked loans, even as global standards adopted by loan trade associations are set to boost activity in these credit facilities around the globe.
Singapore-based Olam also secured a three-year sustainability-linked US$500m credit last year with an eye on digital growth.