In 2019, COFCO International, the trading division of China’s largest agriculture firm, managing 100 million tonnes of commodities, signed a $2.1 billion sustainability-linked loan as its core financing facility, from a consortium of 20 banks. To date, it is the largest credit package to be given to a commodity trader. Furthermore, it is the first loan to be linked to sustainability performances in mainland China.132 It demonstrates COFCO’s commitment to sustainable commodity supply chains and transparency.
COFCO’s loan offers lower interest rates dependent on year-on-year improvements of ESG performance.133 The overall loan has three tranches, with a one-year revolving credit facility and a three-year term loan. Interest rates are tied to COFCO’s ESG rating from Sustainalytics and specific KPIs – such as around the traceability of soft commodities – with a focus on soy from Brazil. BBVA, ING and Rabobank are acting as the lead sustainability coordinators.
COFCO estimates that it will save $1 million a year due to a lower interest rate, and plans to use those savings to further fund its sustainability agenda.134
132 ‘Cofco Arm Secures $2.1bn Loan Tied to Sustainability Performance’. 2019. Financial Times. 30 September 2019. https://www.ft.com/content/930bbf56-a7db-11e9-b6ee-3cdf3174eb89.
133 ‘COFCO International Links Sustainability Performance to New USD 2.1 Billion Credit Facility’. 2019. COFCO International. 16 July 2019. https://www.cofcointernational.com/newsroom/cofco-international-links-sustainability-performance-to-new-usd-21-billion-credit-facility/.
134 ‘Cofco Arm Secures $2.1bn Loan Tied to Sustainability Performance’. 2019. Financial Times. 30 September 2019. https://www.ft.com/content/930bbf56-a7db-11e9-b6ee-3cdf3174eb89.