For agribusinesses like ours, that\nwork across food and feed chains to bridge supply and demand gaps, it\u2019s\nimportant to fulfill our key role to help sustain the world\u2019s growing\npopulation with minimal impact on the environment. That\u2019s why in 2018 we set\nambitious targets to reduce our environmental footprint by 5% over a five-year\nperiod, measuring this in relation to four key performance indicators (KPIs): CO2<\/sub>\nemissions, electricity consumption, water usage and solid waste sent to\nlandfill. <\/p>\n\n\n\n The interest rate incentive that is\nnow part of the company\u2019s RCFs creates a direct connection between our\nperformance against these targets and the cost of funding our operations, such\nthat the better we perform toward our environmental goals, the lower the cost\nof financing. <\/p>\n\n\n\n It is important to note that the\nincentive feature is balanced in terms of impact, with either interest rate\nreductions when the company\u2019s performance achieves its KPI reduction targets or\ninterest rate increases should LDC underperform.<\/p>\n\n\n\n This gives us – and other companies\nwho adopt this kind of financing mechanism – an even greater incentive to succeed\nin our environmental impacts reduction efforts. <\/p>\n\n\n\n In 2019, LDC exceeded its year-on-year reduction goals across all four environmental KPIs. Do you see a similar trend in the industry?<\/strong><\/p>\n\n\n\n Firstly, it\u2019s important to clarify\nthat our asset profile and operational sector are different to other\nagribusiness leaders. Each company will set reduction goals based on what is reasonable\nand achievable in relation to its operational footprint, so direct comparisons\nare not necessarily relevant. <\/p>\n\n\n\n This being said, it can certainly\nbe said that the industry at large is responding to increasing scrutiny and\nexpectations in relation to corporate responsibility for environmental\npreservation, including from the financial community, which expects that the\ncompanies they fund demonstrate efforts in this sense. So it\u2019s not a surprise\nthat sustainability-linked financing mechanisms have been adopted by major agribusiness\nplayers since 2018.<\/p>\n\n\n\n How is performance against environmental performance indicators\nmeasured? Is there an external verification\/audit, and how are results\ncommunicated to financial institutions?<\/strong><\/p>\n\n\n\n Performance is measured annually\nfor each of the four KPIs, with each metric assessed against the company\u2019s 2018\nbaseline level. Annual results are aggregated across LDC\u2019s top 25 assets, which\nrepresent more than 80% of the global emissions footprint for the company, and\nthese figures are verified and certified by an external audit firm. <\/p>\n\n\n\n Our very positive performance overall\nin 2019, compared to the previous year, relates to a number of factors,\nincluding facility run rates and throughput, quality of raw materials and a\ngreater proportion of more modern logistic assets, which by definition have a\nsmaller environmental impact. In addition, we leveraged a one-off opportunity\nto dramatically improve the amount of solid waste sent to landfill at one of\nour facilities. <\/p>\n\n\n\n Each year, LDC provides a\ncertification letter to its banks, which includes detailed KPI performance by\nasset, as well as the audit certificate. Interest rate adjustments are then set\naccording to a pricing grid included in the RCFs, and the new rate applies\nuntil the next annual assessment. <\/p>\n\n\n\n A recent Forbes article stated that \u201cthere is strong evidence to suggest that companies who pursue a strategy of \u2018doing well by doing good\u2019 are better prepared to deal with adverse conditions and represent a lower investment risk.\u201d What are your thoughts on this statement? <\/strong><\/p>\n\n\n\n I am convinced that a company that\ndoes not demonstrate efforts to reduce its environmental impact will have\nincreasing difficulties accessing financial markets within the next five years.\nIn this respect, it is becoming increasingly vital for corporations to not only\nadopt sustainability policies and implement corresponding business practices,\nbut also to link financing to sustainability goals. <\/p>\n\n\n\n This is all the more reason for LDC\nto stay firmly on the side of \u2018green\u2019 companies that can demonstrate in a\ntangible way their environmental commitments, and a willingness to be\naccountable and transparent. <\/p>\n\n\n\n Leading global companies have the maturity to understand that running sustainable operations and protecting sources of funding are necessarily interdependent with environmental stakes and the preservation of the planet\u2019s resources. And also, therefore, a duty to take the lead in this area.<\/p>\n\n\n\n Will LDC set new goals to further improve performance,\nafter 2022? Are there any plans to further connect financing with sustainable\nbusiness practices?<\/strong><\/p>\n\n\n\n Yes. Our short-term goal is to\napply sustainability-linked pricing across all our regional syndicated RCFs, as\nand when they are renewed, which will take another two years. <\/p>\n\n\n\n After that, while challenging\nourselves to do more and better in terms of environmental performance, we will\nalso look to add more KPIs to the list of measures against which we are\nevaluated, broadening the scope to other sustainability performance indicators\n\u2013 for instance governance processes, social and community impacts, etc. <\/p>\n\n\n\n Green bond issuance has risen rapidly in recent years,\nclimbing to US$262bn worldwide in 2019, according to data from S&P Global. If\ngreen bonds allow issuers to raise capital and invest in projects with\nenvironmental benefits, would that also apply to LDC and why\/why not? <\/strong><\/p>\n\n\n\n Initially, green bonds allow the\nissuer to invest the proceeds of the bond into larger environmental projects –\nfor instance a project to fully refurbish a processing asset to make it less\npolluting. <\/p>\n\n\n\n LDC is not yet in a position to\nsubmit such a large project, but we are keenly monitoring the green bond market,\nto evaluate the right time to seize such opportunities. <\/p>\n\n\n\n The green bond market is now\nevolving toward the loan market; we now see bond issuances linking ESG\n(environmental, social and corporate governance) KPIs with the bond interest\nrate.<\/p>\n\n\n\n We see our sustainability-linked\nRCFs as a first step toward integrating a greater set of green financing tools,\nwith broader KPIs that go beyond environmental impacts, to embrace other areas\nthat we consider equally central to sustainable business.<\/p>\n\n\n\n Interview with Beno\u00eet David-Bellouard, Global Head of Treasury and Corporate Finance In 2019, LDC linked a significant portion of its new financing with environmental performance, by means of sustainability-linked pricing mechanisms built into several regional syndicated Revolving Credit Facilities (RCFs). How does this mechanism work? How else is green finance helping to drive positive change? […]<\/p>\n","protected":false},"featured_media":4583,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[120,122],"tags":[],"class_list":["post-3420","stories-insight","type-stories-insight","status-publish","format-standard","has-post-thumbnail","hentry","category-in-the-field","category-on-the-horizon"],"acf":[],"yoast_head":"\n![\"\"](\"https:\/\/www.ldc.com\/vn\/wp-content\/uploads\/sites\/22\/Environment-case-studies-blog-visual_crop-1024x377.jpg\")
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