BRAZIL— Global agri-business COFCO International has signed an agreement for a new US$1.6 billion sustainability-linked revolving credit facility with 19 banks from China, Australia, Europe, Japan, Singapore and the United States.

The lenders have agreed to provide financial incentives in the form of lower interest rates for the trader to achieve pre-agreed sustainability targets covering the traceability and socio-environmental screening of its Brazil soy supplies and Sustainalytics’ ESG management score.

Each sustainability target will be audited or assessed annually by an independent third party and the sustainability linked loan (SLL) follows guidelines based on Loan Market Association SLL Principles.

Banco Bilbao Vizcaya Argentaria SA (BBVA), Bank of China (Hong Kong) Ltd and SMBC Bank International plc (SMBC) are the sustainability coordinators while BBVA is also the global coordinator as well as documentation and facility agent for the loan.

This is COFCO International’s third sustainability-linked syndicated loan and brings the company’s total Sustainability-linked loan commitments to US$2.3 billion. The company signed its first sustainability-linked loan in July 2019, which was the largest sustainability-linked loan for a commodity trader, and a second sustainability-linked loan in September 2021.

“The loans have various tranches so they expire at various times and overlap. This latest loan refinances the revolving loan facilities that were established under the company’s 2019 SLL,” said the representative. 

In terms of adherence to the criteria in those earlier lending schemes, the spokesperson reported: “To date, we have met all annual soy, palm and ESG score (Sustainalytics) targets under both the 2019 and 2021 loans.”

COFCO’s 2021 sustainability report, released in May this year, shows it wants to achieve full traceability to farm for directly sourced Brazil soybeans by 2023.

By 2023, its overarching goal is a deforestation and conversion-free soy supply chain in environmentally sensitive regions of South America, including the Cerrado and the Amazon, through farm-level traceability and monitoring of direct and indirect purchases.

For palm oil, COFCO aims to achieve full traceability to mill level for its global palm oil sourcing, monitor direct suppliers’ performance using its scorecards and developing action plans, reviewing social and environmental risks, and ensuring that direct suppliers have Commitments to No Deforestation, No Peat and No Exploitation (NDPE) policies and plans in place by 2023.

COFCO International’s sustainability report shows that, in 2021, it traded 133 million tons of commodities, generating revenues of US$48billion. Actual profit was not disclosed and all margin savings will be used to fund the company’s own sustainability, traceability, or social and environmental improvement projects.

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