COFCO Intl secures new $1.6bn sustainability linked loan
Some 19 lenders, including major banks in China, Australia, Europe, Japan, Singapore and the US 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.
A spokesperson for COFCO International, which is based in Geneva and controlled by the China state owned COFCO Corp, told FeedNavigator it has signed off on annual targets with the lenders which consist of:
- A percentage of directly sourced Brazilian soybean volume being traceable to the specific farm, and
- A percentage of directly sourced Brazilian soybean volume with social and environmental assessments out of the total directly sourced Brazilian soybean being traceable to the specific farm.
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 the crop merchant's third such loan. It secured a $2.3bn SLL in July 2019, which was the largest such loan for a commodity trader. It also agreed a second sustainability linked credit facility 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. A term loan under those facilities (2019) was already refinanced in 2021 with a new three-year sustainability commitment. The current commitments total US$2.3bn," 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.
The trader also outlined how, through the Soft Commodities Forum (SCF), it has traced all its direct soy suppliers within 61 municipalities in the Cerrado. “We have also assessed 100% of our direct soy suppliers in the sensitive Matopiba region for social and environmental risks.”
Its overarching goal is a deforestation and conversion-free soy supply chain by 2030 in environmentally sensitive regions of South America, including the Cerrado and the Amazon, through farm-level traceability and monitoring of direct and indirect purchases. However, that timeline would be five years later than Bunge’s target; the US trader has set 2025 as its deadline for deforestation-free supply chains.
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 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$48bn. Actual profit was not disclosed.
Posted by Sharon Coolidge,