Description financing model: Direct Corporate Financing
Direct Corporate Financing refers to capital provided directly to food & agri corporates through instruments like loans or bonds. Sustainable debt is a form of direct corporate financing offered by commercial lenders to corporates with strong credit profiles. These loans are linked to sustainability targets and help fund low-carbon, resilient supply chains
Applicability: Best suited for large borrowers with high credit ratings
Considerations: Scalability improves with appropriate loan discount levels, especially when linked to clear, measurable sustainability KPIs that enhance credibility and impact
Description of de-risking tool(s):
N/A
Case study description:
Consortium of 19 banks provide revolving credit facility loan to COFCO with preferential interest rates based on traceability targets of Brazilian soy
- COFCO implements projects (incl. through technical assistance) with their upstream supply chain, focused on traceability of soy in Brazil
- Sustainalytics, an ESG ratings agency, provides an ESG management score for COFCO based on performance against KPIs
- COFCO takes out a sustainability-linked loan (1- & 3-year credit facility)
- As COFCO meets ESG management score targets, it receives discounts on the interest payments of the loan
COFCO raised $1.6B through the loan, and met all supply chain traceability and socioenvironmental risk targets related to the loan
